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DTN Midday Livestock Comments          07/23 11:45

   Limit Lower Trade Floods Hog Complex                       

   Aggressive price support on Tuesday created a vacuum in the livestock 
markets once buyer interest eased. This caused lean hog futures to tumble 
sharply lower with all nearby contracts locked in limit-down trade. Cattle 
futures are mostly lower. 

By Rick Kment
DTN Analyst


   Early support in the cattle complex quickly eroded, and moderate to sharp 
losses were posted in live cattle futures. Lean hog futures are sharply lower 
as concerns of softening cash prices and uncertainty about further pork demand 
have pushed all nearby contracts limit lower. Corn futures are lower at midday. 
September corn futures are 3/4 cent per bushel lower. Stock markets are mixed 
in light trade. The Dow Jones is 31 points lower while Nasdaq is up 18 points.


   August live cattle futures established new contract highs early in the 
trading session Wednesday. Following the initial push higher, prices have 
subsequently tumbled lower. Little has changed in the market fundamentally or 
technically, but the recent highs have allowed traders to square positions as 
uncertainty about further aggressive price support becomes more apparent. 
Nearby contracts are holding moderate losses of 50 to 70 cents per cwt, while 
deferred futures are holding losses well over $1 per cwt at midday. Cash cattle 
markets have seen some initial bids Wednesday morning. Early bids of $156 are 
seen in Kansas, while dressed bids of $255 per cwt are developing in Nebraska. 
One sale was reported at $255 in the North. The strong rally Tuesday helped 
support increased packer interest, but the pullback in futures prices early 
Wednesday may cause some to rethink market aggressiveness through the end of 
the week. Asking prices are at $160 and higher in the South and $255 and higher 
in the North. Beef cut-outs at midday are mixed, $1.54 per cwt higher (select) 
and down $0.77 per cwt (choice) with active movement of 126 total loads 
reported (65 loads of choice cuts, 40 loads of select cuts, 0 load of 
trimmings, 24 loads of ground beef).


   Feeder cattle futures are mixed Wednesday. Initial strong follow-through 
gains during overnight trade quickly evaporated as additional volume surfaced. 
This led to a frenzy of positioning activities through the morning. Nearby 
contracts are currently mixed in a wide range as trade volume has slowed 
through the complex.  


   Aggressive price support seen Tuesday was short-lived as continued weakness 
in cash markets is creating some major concern about sustaining price levels 
through the hog complex. Nearby contracts quickly moved to limit down, falling 
$3 per cwt in all contracts through February 2015. The price spread is wide; 
nearby contracts are priced from $96 to $124 per cwt. Continued weakness could 
create some significant liquidation through the complex, potentially putting 
more emphasis on deferred futures priced below $100 per cwt. Cash prices are 
lower on the National Direct morning cash hog report. The weighted average 
price fell $0.95 per cwt to $125.03 per cwt with the range from $125.00 to 
$126.00 per cwt on 3,178 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 247 loads selling as prices falling 
$0.48 per cwt. Lean hog index for 7/18 is at 133.16 down 0.62, with a projected 
two-day index of $132.57 down 0.59.

   Rick Kment can be reached at 


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