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DTN Midday Livestock Comments          06/22 12:17

   Sharp Pressure Continues to Hold Across Livestock Trade

   Aggressive losses have held in cattle and hog futures early Thursday 
morning. This has led to triple-digit pressure across most markets with traders 
focusing on weaker beef and pork values. The lack of support in cash cattle 
trade is creating even more uncertainty in the cattle futures trade during late 
week trade. 

By Rick Kment
DTN Analyst

GENERAL COMMENTS: 

   Strong market weakness is expected to continue to develop through the 
complex. This may continue to be seen through the cattle and hog market as 
triple digit losses have been seen in all markets. There have been widespread 
concerns in cattle trade given the aggressive cash market pressure which have 
developed through the week. Beef and pork values have eroded Thursday, allowing 
traders to back away from the market. This may limit trade volume through the 
end of the session. Corn prices are lower in light trade. July corn futures are 
5 cents lower. Stock markets are lower in light trade. The Dow Jones is 24 
points higher while Nasdaq is up 21 points.

   LIVE CATTLE:

   Strong market pressure has continued to develop through the live cattle 
futures with losses of $1 to $1.50 per cwt seen at midday. This lack of support 
is developing based on the weakness in cash and beef values as traders continue 
to quickly and steadily back away from the market. There could be additional 
pressure seen in the market through the rest of the week as traders prepare for 
the upcoming cattle on feed report. Cash cattle trade continues to develop in 
the south at $120 per cwt through the morning even though overall trade remains 
generally light. This is another $2 per cwt lower than Wednesday's price 
levels, and accounting for total trade losses of $11 per cwt lower than last 
week. This could create additional wide pressure in the North also as 
additional trade is expected to develop before the end of the day. Even though 
the cattle on feed report will be released Friday, it is expected that cattle 
business will likely be done by the end of the day Thursday. Beef cut-outs at 
midday are lower, $1.00 lower (select) and down $0.95 per cwt (choice) with 
light movement of 76 total loads reported (39 loads of choice cuts, 15 loads of 
select cuts, 11 load of trimmings, 11 loads of ground beef). 

   FEEDER CATTLE:

   Losses have slipped from early morning lows, but remain significant through 
the complex as traders continue to focus on morning pressure and the losses in 
cash markets seen during the week. It is expected that nearby contracts will 
hold losses near $2 per cwt through the rest of the session which will likely 
keep markets trading in a defensive pattern through the remainder of the week.  
  

   LEAN HOGS:

   Pressure has continued to develop through the morning Thursday with traders 
focusing on nearby contacts with the most aggressive selling seen in August and 
October futures. This lack of buyer interest is not significantly impacting the 
overall lean hog market as a whole due to the lack of pressure on front month 
July contracts which is still trading at $85 per cwt. But the focus on position 
squaring following an aggressive run of cash market support and strong pork 
value surges seen in the last few days. This could limit additional buyer 
interest in the coming days, but may not keep buyers out of the market long 
term. Cash prices are lower on the National Direct morning cash hog report. The 
weighted average price fell $1.32 at $85.48 per cwt with the range from $85.00 
to $88.00 on 3,735 head reported sold. Cash prices are lower on the 
Iowa/Minnesota Direct morning cash hog report. The weighted average price fell 
$1.05 at $86.15 per cwt with the range from $85.00 to $87.00 on 930 head 
reported sold. The National Pork Plant Report reported 116 loads selling with 
prices falling $1.19 per cwt. Lean hog index for 6/20 is at $88.03 up $1.48 
with a projected two-day index of $89.30 up $1.27. 

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


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