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DTN Midday Livestock Comments          10/21 11:46

   Light Pressure Redevelops in Hog Futures   

   Narrowly mixed trade seen in the lean hog futures through most of the 
morning has eroded based on aggressive pressure in pork carcass values in the 
morning report. The fear that further pork value losses may continue has 
created additional weakness in hog futures. 

By Rick Kment
DTN Analyst


   Early mixed price direction in lean hog futures has quickly eroded following 
strong triple digit pressure in the overall carcass value Tuesday morning. This 
is creating additional concern that additional widespread pressure may push 
nearby futures prices to or below $85 per cwt. Mixed trade is seen in nearby 
live cattle futures despite light gains in beef values in the morning report. 
Deferred live cattle futures are heavily influenced by the triple digit losses 
in feeder cattle trade. Corn prices are higher in light trade. December corn 
futures are 3 cents per bushel higher. Stock markets are higher in light trade. 
The Dow Jones is 168 points higher while Nasdaq is up 78 points.


   Mixed trade is holding in live cattle futures Tuesday morning following a 
renewed fury of buying support which developed in nearby contracts based on 
follow through buying interest. The focus on potential support seen in boxed 
beef values and the impact on cash values through the end of the week is 
helping to limit seller pressure. Deferred contracts remain under light 
pressure as the triple digit losses in feeder cattle futures have kept buyers 
from stepping into the action. Cash cattle markets remain quiet which is 
typical for a Tuesday as bids and asking prices are not yet well developed. It 
may easily be Wednesday until initial token bids are seen, which may delay 
active trade to the end of the week. Asking prices are expected o develop 
around $167 and higher in the South and $260 and higher through the North. Beef 
cut-outs at midday are higher, $0.39 per cwt higher (select) and up $0.20 per 
cwt (choice) with light movement of 77 total loads reported (38 loads of choice 
cuts, 24 loads of select cuts, 5 loads of trimmings, 10 loads of ground beef).


   Daily up and down shifts in the feeder cattle futures continue to be seen, 
although Tuesday's move has been unable to move prices the daily trading limit 
of $3 per cwt, or at least yet. All but front month contracts are holding 
triple digit losses ranging from $1.30 to $2.30 per cwt based on uncertainty of 
follow through beef demand support through early 2015. Front month October 
contracts are trading 85 cents per cwt lower as light buyer support in nearby 
live cattle futures is helping to limit initial selling pressure. 


   Lean hog trade remained well contained in a extremely narrow mixed trading 
range through most of the morning based on the potential to draw additional 
stability into the pork complex. But the morning pork cutout report dashed any 
early expectations of market firmness as sharp losses were seen in pork values. 
This has turned the lean hog futures market weaker once again with moderate 
losses holding at midday. It is uncertain if the recent turn lower has much 
more support given the recent market pressure, or if prices will moderate back 
to nearly unchanged once the initial reaction to lower pork prices dissipated. 
Cash prices are lower on the National Direct morning cash hog report. The 
weighted average price lost $0.87 per cwt to $95.96 per cwt with the range from 
$87.00 to $98.00 per cwt on 4,022 head reported sold. Cash prices are higher on 
the Iowa Minnesota Direct morning cash hog report. The weighted average price 
added $0.44 per cwt to $97.32 per cwt with the range from $94.50 to $98.00 per 
cwt on 1,062 head reported sold. The National Pork Plant Report is reported 182 
loads selling as prices falling $3.27 per cwt. Lean hog index for 10/17 is at 
$106.78 down 1.43, with a projected two-day index of $105.45 down 1.33.

   Rick Kment can be reached at rick.kment@dtn.com 


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