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DTN Midday Livestock Comments          10/17 11:54

   Feeder Cattle Turns Sharply Lower Once Again

   Strong gains, which developed in cattle futures Thursday, were short lived 
as feeder cattle futures are trading at or near limit losses midday Friday. 
Moderate buying is holding through the lean hog complex, allowing for 
end-of-week short covering. 

By Rick Kment
DTN Analyst



GENERAL COMMENTS: 

   Feeder cattle futures continue to remain volatile, trading limit higher 
trade Thursday for limit down price moves at midday Friday. The weaker tone in 
the feeder cattle market is leaving live cattle contracts unsupported, allowing 
for losses between $1 and $2 per cwt to quickly step back into the complex. 
Corn prices are lower in light trade. December corn futures are 2 cents per 
bushel lower. Stock markets are higher in light trade. The Dow Jones is 273 
points higher while Nasdaq is up 60 points.

   LIVE CATTLE:

   Triple-digit losses are seen through the entire live cattle complex 
following light to moderate pressure expanding through morning trade. The 
aggressive losses, which are redeveloping in the feeder cattle futures, have 
caused traders to move their focus from firm cash trade earlier in the week, 
and back to the weaker tone developing in the feeder cattle futures. A close 
below $164.90 per cwt in October futures would signal a lower weekly close, 
creating potential follow-through pressure early next week. Cash cattle 
activity is done for the week after moderate to active trade seen midweek 
satisfied needs by packers to gain access to needed cattle. It is expected that 
feeders will remain aggressive early next week when show lists are distributed. 
Beef cut-outs at midday are lower, $0.39 per cwt lower (select) and down $0.01 
per cwt (choice) with light movement of 68 total loads reported (32 loads of 
choice cuts, 23 loads of select cuts, zero loads of trimmings, 13 loads of 
ground beef).

   FEEDER CATTLE:

   Feeder cattle futures have returned to the market tone seen early in the 
week when aggressive selling pressure was so evident. The limit to near limit 
losses which developed Friday, have offset gains which flooded the market 
Thursday, allowing for additional concern about long term buyer interest rather 
than fundamental support of cash market strength. Total volume through the 
morning is uncertain, although the aggressive pressure in the market is opening 
the door for additional liquidation early next week.  

   LEAN HOGS:

   Nearby lean hog futures remain mixed in a moderate trading range following 
as eroding pork values are being offset by short covering following losses 
earlier in the week. Deferred contracts are holding moderate to strong gains 
based on traders expecting the recent sharp pressure may be a bit aggressive, 
leaving the complex in an oversold situation heading into the weekend. Traders 
continue to focus on the aggressive slide in cash and meat values as well as 
growing supply concerns. Cash prices are lower on the National Direct morning 
cash hog report. The weighted average price lost $2.05 per cwt to $98.18 per 
cwt with the range from $92.00 to $99.00 per cwt on 2,586 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 143 loads 
selling as prices falling $0.98 per cwt.  Lean hog index for 10/15 is at 
$109.10 down 0.44, with a projected two-day index of $108.21 down 0.89.

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


(SK)

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