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DTN Midday Livestock Comments          07/22 11:36

   Cattle Futures Blast Higher Triple-Digit Recovery at Midday

   The cattle complex is sharply higher at midday, sparked by significant 
short-covering and profit-taking before the release of the July 1 Cattle on 
Feed report. Lean hog futures are also moving higher in late-morning business, 
supported by short-covering and the technical correction of oversold charts.

By John Harrington
DTN Livestock Analyst

GENERAL COMMENTS: 

   Cash cattle trade is very quiet in late-morning business with both bids and 
asking prices poorly defined. We have seen a few dressed bids in the North at 
$180 to $182. Additionally, a few live bids have surfaced in Kansas at $115. It 
is possible that trading is done for the week. According to the midday report, 
the national hog base is $0.93 lower compared with the Prior Day settlement 
($63.00-70.21, weighted average $68.95). Corn futures at midday were slightly 
lower, down 1 to 2 cents. 

   LIVE CATTLE: 

   After a very bearish week, live cattle futures are trying to adjust some 
higher at midday. Specifically prices are currently 92 to 135 higher, supported 
by aggressive short-covering and pre-report positioning. Live issues actually 
opened lower thanks to follow-through selling. But late-week buying interest 
quickly surfaced, lifting the market from extreme contract lows posted on 
Thursday. The July 1 Cattle on Feed report will be released at 2 p.m. CDT. 
Average guesses suggest that total on feed will be up 1% to 2%, placed in June 
will be 6% to 7% larger, and marketed in June will be 9% to 10% higher. Beef 
cut-outs are mixed at midday, off .34 (choice, $200.36) to down .14 (select, 
$189.96) with light box movement (45 loads of choice cuts, 19 loads of select 
cuts, 3 loads of trimmings, 6 loads of coarse grinds).

   FEEDER CATTLE: 

   Like their live counterparts, feeders quickly reversed from a lower opening. 
Feeder contracts are now trading sharply higher, up 177 to 392. The late-week 
buying interest is tied to short-covering and pre-on feed report profit-taking. 

   LEAN HOGS: 

   Lean hog contracts are also correcting from Thursday's aggressive round of 
selling. Prices are 45 to 192 higher at this writing with deferred issues 
outperforming nearbys. But even if the board manages to hold significant gains 
through the close, real technical progress is unlikely. In short, the positive 
action at midday looks like nothing more than a dead cat bounce. Carcass value 
is modestly higher at midday, as strength in hams and bellies outweighed 
weakness in other cuts. Pork cut-out: $89.37, up 0.46. CME cash lean index for 
07/20: 77.87, off 0.51 (DTN Projected lean index for 07/21: 77.13, off 0.74).  

   John A. Harrington can be reached at john.harrington@dtn.com 


(CZ)

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