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DTN Midday Livestock Comments          03/22 11:40

   Selling Develops in Hog Futures

   Following early buyer support, traders quickly backed away from all 
livestock markets at midday. This allowed for increased market uncertainty at 
the end of the week and mixed price levels.

By Rick Kment
DTN Analyst

General Comments

   Wide-ranging price swings swept through hog markets Friday with initial 
strong gains quickly replaced by aggressive morning losses. The volatility in 
the complex may continue through the end of the session given traders trying to 
adjust positions at the end of the week. This volatility led to strong market 
shifts in cattle trade midday Friday. Corn futures are higher in sluggish 
trade, but have given back most of the early gains. May corn futures are 3/4 
cent higher. Stock markets are lower in light trade. Dow Jones is 358 points 
lower with Nasdaq down 152 points. 


   Narrow losses have trickled into live cattle trade as buyers seem to be 
caught off guard by the sharp turnaround in hog trade. The momentum of this 
shift has little impact on beef market fundamentals, but the entire livestock 
market has been so emotionally charged by the recent surge in hog trade, that 
any break from this pattern will impact all livestock futures. Mixed trade is 
seen at midday, with nearby contracts 30 to 60 cents lower, while deferred 
trade has stabilized with a 5 cent gain. Cash cattle interest is slowly 
improving with live bids of $126 per cwt seen in all areas through the morning. 
These bids are at the same price levels as seen earlier in the week, and 
unlikely to get any attention from feeders at this point. Dressed bids have yet 
to resurface Friday morning, creating the question if packers will wait until 
late afternoon before even offering bids. Asking prices remain at $130 to $132 
per cwt live and $210 dressed. Trade may be delayed until after the cattle on 
feed report is released at 2 p.m. Boxed Beef cut-outs at midday are mixed, 
$0.17 higher (select) and down $0.15 per cwt (choice) with light movement of 46 
total loads reported (23 loads of choice cuts, 6 loads of select cuts, no loads 
of trimmings, 11 loads of ground beef).


   The aggressive turnaround in hog trade late Friday morning seemed to quickly 
spark selling pressure through all cattle trade. Feeder cattle, which posted 
early triple digit gains, have now turned lower, with most contracts 50 cents 
to $1 per cwt lower. The volatility seen in the hog market caused spill over 
buying through feeder cattle over the past week, but a similar impact is 
expected if hog markets move quickly lower over the near future. Traders are 
still expected to focus on underlying cattle market support, which could help 
to bring buyers back into the market late in the session.


   Trade in the hog complex has quickly and forcefully changed direction. 
Initial buyer support flooded the market, moving summer contracts limit higher, 
up $4.50 per cwt. But the over the last couple of weeks has quickly changed, as 
buyers kept from moving into the market. This vacuum left the market open, as 
active selling developed. At midday prices are $1 to $2 per cwt lower, with 
concerns that the unchecked market rally could allow for further market swings 
through the complex. The emotional nature that has led to the current market 
levels can be a dangerous and double-edged sword. Cash prices are higher on the 
National Direct morning cash hog report. The weighted average price added $1.01 
at $65.16 per cwt with the range from $56.00 to $70.00, on 3,611 head reported 
sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog 
report. The weighted average price added $3.25 at $69.43 per cwt with the range 
from $56.00 to $70.00, on 866 head reported sold. Pork values continue to shift 
higher with strong gains seen in all primal cuts midday Friday. Pork cutouts 
gained $1.02 per cwt at $77.27 per cwt with 196 loads traded. Lean hog index 
for 3/20 is $60.75, up $1.53, with a projected two-day index is $62.41, up 

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


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