DTN Midday Livestock Comments

GENERAL COMMENTS:

Limit losses in live and feeder cattle markets seen through most of the morning has been the focus of the livestock complex Monday. This is allowing cattle markets to quickly ratchet lower following the unchecked market rally that has developed over the last three weeks. Even with the current market pressure, prices are still significantly above any technical support and could see additional pressure before buyers are willing to step back into the complex. Corn prices are lower in light trade. December corn futures are 1 cent lower. Stock markets are lower in light trade. The Dow Jones is 80 points lower while Nasdaq is down 65 points.

LIVE CATTLE:

Live cattle futures quickly turned sharply lower Monday morning as initial trade took into account the weakness from the cattle on feed report. But overall lack of support following the surge higher seen in cattle prices through September without any significant resistance has allowed for widespread liquidation to develop. This could lead to additional pressure not only through the end of the session, but could spill into early trade Tuesday. Nearby contracts are holding limit losses at midday, causing concerns of expanded trading limits Tuesday morning. Cash cattle activity remains undeveloped with bids and asking prices quiet Monday morning. Show lists appear to be generally steady with last week. Overall trade may be delayed until the last half of the week, futures trade may heavily affect cash markets. Beef cut-outs at midday are higher, $1.56 higher (select) and up $1.78 per cwt (choice) with light movement of 44 total loads reported (22 loads of choice cuts, 7 loads of select cuts, 11 loads of trimmings, 3 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have been locked in limit losses through most of the morning as October through April futures spent most of the early trading session $4.50 per cwt lower. Spot month September contracts have held losses of $2.80 per cwt while light trade volume has been developing in all contracts due to most contracts locked due to limit losses. At midday, deferred contracts have pulled off of session lows, but the lack of support remains evident as very little buyer support is able to move back into the complex at this point. Traders are focusing on the bearish cattle on feed report released Friday, but also the lack of follow-through momentum following the recent rally is leaving the market unsupported.

LEAN HOGS:

Lean hog futures remain mixed in light morning trade. The focus on limit losses in the cattle trade seems to have taken most of the attention off of the lean hog futures trade through Monday morning. Traders continue to hold narrow 10 to 40 cent gains in nearby contracts, while deferred futures are holding moderate pressure based on outside market pressure in the complex. Light volume is expected to be seen through the rest of the session. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.98 at $47.51 per cwt with the range from $44.00 to $49.00 on 3,519 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report reported 159 loads selling with prices gaining $2.10 per cwt. Lean hog index for 9/21 is at $59.08 down $1.04 with a projected two-day index of $57.66, down 1.42.

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

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