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DTN Midday Livestock Comments          08/21 12:01

   Cattle Support Holding Midday 

   Moderate gains have held in cattle futures early Wednesday morning despite 
initial support slowly eroding and pressure developing in hog trade.

By Rick Kment
DTN Analyst

General Comments

   Strong midday losses are developing in lean hog futures as traders slowly 
back away from previous gains. The early morning support in cattle futures is 
holding prices higher, but prices have backed away from morning highs based on 
limited buyer activity moving back into the complex. Corn futures are steady to 
higher in light morning trade. September corn futures are 1 cent higher. Stock 
markets are higher in light trade. Dow Jones is 269 points higher with NASDAQ 
up 74 points. 

   LIVE CATTLE:

   Additional buying activity is moving back into the complex with nearby 
contracts holding moderate gains of 30 to 70 cents per cwt as traders remain 
focused on underlying support through the entire complex. Although prices have 
slowly worked back from initial price support, seen early Wednesday, the 
underlying firmness in the complex continues. This is creating additional 
optimism that recent gains may hold through the end of the week. October 
futures are currently trading at $100.17 per cwt, with the target point of $100 
per cwt the main focus of many traders. If spot-month October futures break 
below the $100 per cwt threshold at or before closing bell, this could spark 
additional market weakness later in the week. Cash market activity still 
remains at a standstill with packer bids still unavailable. Although it is 
expected that packer interest will start to show some life through the end of 
the day, the expected wide gap between any asking prices and potential bids is 
likely to limit either side from finding common ground until later in the week. 
Cash trade is likely to be pushed off until sometime Thursday or Friday, and 
quite possibly after the release of the cattle on feed report Friday afternoon. 
Boxed Beef cut-outs at midday are higher, $1.56 higher (select) and up $0.46 
(choice) with moderate light of 65 total loads reported (44 loads of choice 
cuts, 9 loads of select cuts, 4 loads of trimmings, 8 loads of ground beef).

   FEEDER CATTLE:

   Active support moved back into feeder cattle trade with September futures 
holding a $1.02 per cwt gain at midday. Although prices have slowly eroded from 
morning highs, the underlying short-term support is helping to create a 
combination of technical and fundamental support midweek. Limited attention is 
being given to early estimated for the upcoming cattle on feed report, but with 
analyst's estimates expected even with last year's placement levels in July, 
traders are expecting any major surprises in the late-week report.

   LEAN HOGS: 

   Lean hog futures have turned lower following the inability to sustain 
early-market gains as increased volume moved into the complex. The continued 
pressure in cash hog prices is not a surprise to the market, although the 
inability to find any sense of strong fundamental support on which to build a 
market base is once again causing nearby futures to erode. October futures are 
holding $1.15 per cwt losses, trading at $63.82 per cwt while other nearby 
contracts are holding 40 to 75 cent losses at midday despite limited volume. 
The concern that follow-through pressure may once again test long-term lows has 
many traders nervous and unwilling to actively step back into the complex. Cash 
prices are lower on the National Direct morning cash hog report. The weighted 
average price is down $2.18 at $66.89 per cwt with the range from $58 to $71.50 
on 4,322 head reported sold. Pork values posted limited gains based on 
triple-digit price increases in ham and belly cuts. Pork cutouts added $0.72 
per cwt at $84.63 per cwt with 165 loads traded. Lean hog index for 8/17 is 
$77.99, down 0.56, with a projected two-day index is $77.40, down 0.59.

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


(CZ)

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