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DTN Midday Livestock Comments          10/22 11:54

   Hog Futures Lead Complex Higher 

   Strong gains redeveloped across nearby lean hog futures Wednesday morning 
despite weak cash and meat values. Cattle contracts have rebounded from 
Tuesday's losses, as traders continue to also focus on potential cash market 
support. 

By Rick Kment
DTN Analyst



GENERAL COMMENTS: 

   Lean hog trade has led the livestock complex higher Wednesday with nearby 
contracts holding $1.50 to $1.90 per cwt gains at midday. Firm support is also 
seen in the live cattle futures market as traders focus on the potential to 
draw additional cash market before the end of the week. Corn prices are higher 
in light trade. December corn futures are 1 cent per bushel higher. Stock 
markets are lower in light trade. The Dow Jones is 40 points lower while Nasdaq 
is down 10 points.

   LIVE CATTLE:

   Nearby cattle futures have rebounded Wednesday morning based on the 
potential of cash market support at the end of the week. Triple digit gains are 
holding in October through February futures. This is not expected to spark 
additional widespread buying interest through the end of the session, but there 
appears to be enough underlying buyer support to keep price in the current 
trading range. Deferred futures are higher, but the lack of momentum in the 
complex suggests there is still underlying concerns about long term demand 
growth at current price levels. Cash cattle activity remains quiet with just 
one token bid developing in Kansas through the morning. Bids of $162 per cwt 
are likely to get little to no attention given the support in futures market, 
at least at this point in the week. It is likely that active trade will be 
delayed until the end of the week, and quite possibly until after the cattle on 
feed report Friday. Beef cut-outs at midday are higher, $0.72 per cwt higher 
(select) and up $0.92 per cwt (choice) with active movement of 154 total loads 
reported (50 loads of choice cuts, 60 loads of select cuts, 18 loads of 
trimmings, 26 loads of ground beef).

   FEEDER CATTLE:

   Feeder cattle trade appears to shifted from leading the live cattle complex 
early in the week to tagging along with strong moves in nearby live cattle 
trade. The focus on firming beef values in the morning boxed beef report and 
the potential to push cash cattle prices higher have gained some renewed 
attention in feeder cattle futures. Most contracts are holding moderate gains, 
although there remains a lot of volatility through the complex, which could 
lead to additional wide price swings through the end of the week. 

   LEAN HOGS:

   Strong buyer support has redeveloped in nearby lean hog futures markets 
Wednesday despite continued pressure in both cash hog and pork cutout values. 
Traders are focusing on the recent pressure, which is helping to draw moderate 
commercial buyer interest back into the complex. The ability to hold triple 
digit gains through the end of the trading session could help to spark some 
follow-through support through the rest of the week. Even if prices post and 
hold a significant price bounce, the underlying concern of strong supplies over 
the next several months remain, they are just losing the attention of traders 
for the time being. Cash prices are lower on the National Direct morning cash 
hog report. The weighted average price lost $1.09 per cwt to $94.14 per cwt 
with the range from $84.00 to $94.50 per cwt on 2,798 head reported sold. Cash 
prices are unreported due to confidentiality on the Iowa Minnesota Direct 
morning cash hog report. The National Pork Plant Report is reported 275 loads 
selling as prices falling $2.71 per cwt. Lean hog index for 10/20 is at $105.45 
down 1.33, with a projected two-day index of $104.17 down 1.28.

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


(SK)

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