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DTN Midday Livestock Comments          02/09 12:04

   Sluggish Buyer Support Trims Early Gains

   Strong triple-digit gains seen in feeder cattle futures as well as firm live 
cattle market support have eroded at midday based on lackluster follow-through 
interest developing later in the session. Lean hog futures remain mixed in an 
extremely narrow trading range as firming market fundamentals help to keep 
traders focused on slowly pushing the market higher. 

By Rick Kment
DTN Analyst


   Firm buyer support seen early Tuesday morning slowly eroded as buyer support 
slowly fell off the bandwagon during the morning session. The lack of 
additional market information and trade interest developing in the complex is 
keeping April through December live cattle futures in a narrow trading range. 
Mixed trade is holding across the lean hog futures trade as traders continue to 
focus on the firm support in market fundamentals and avoid the drama of market 
volatility in outside markets. Corn prices are lower. March corn futures are 2 
cents lower. Stock markets are lower in active trade. The Dow Jones is 89 
points lower while Nasdaq is down 29 points.


   February live cattle futures have traded firmly lower through the entire 
session Tuesday, holding $1.40 per cwt losses at midday, although trade volume 
remains extremely light. The rest of the complex remains steady to moderately 
higher, although the inability to hold onto early market support is creating 
some underlying market concerns about the ability to sustain buyer support in 
the complex. At this point, traders are expecting markets to remain in a narrow 
range with the exception of spot February contracts which are trying to align 
with April contract prices now that first-notice day has arrived in February 
contracts. Cash cattle markets are still untraded, although some bids are 
starting to develop in the South through the morning Tuesday. Bids are seen at 
$132 across both Kansas and Texas, which will start the ball rolling and 
potentially create additional movement as the week continues. Asking prices are 
expected to be around $138 in the South and $215 in the North, although cash 
activity is likely to be delayed until midweek or later. Beef cut-outs at 
midday are lower, $1.51 lower (select) and down $0.05 per cwt (choice) with 
light movement of 77 total loads reported (39 loads of choice cuts, 21 loads of 
select cuts, 8 loads of trimmings, 9 loads of ground beef).


   Even though nearby feeder cattle futures continue to hold onto light to 
moderate gains, the inability to maintain the support seen early in the session 
is creating some underlying concern in the complex. Deferred futures have moved 
lower at midday, creating additional pressure across the complex, as traders 
are focusing on the ability to draw additional interest back into the market, 
and the potential that prices see even more price swings in the last hour of 


   Market activity has been stuck in a narrow trading range through the morning 
with prices mixed as nearby gains have been offset by light pressure in 
deferred contracts. The lack of overall movement has kept the lean hog futures 
market in a choppy but firming pattern over the last couple of months as very 
little market volatility has developed through the complex over the last couple 
of weeks. The focus on firming market fundamentals is helping to draw 
additional buyer support back into the complex, but the ability to keep markets 
consistent despite the wild moves of surrounding markets seems to be the most 
impressive attribute of the hog complex of early 2016. Cash prices are higher 
on the National Direct morning cash hog report. The weighted average price 
gained $0.25 per cwt to $61.58 per cwt with the range from $59.90 to $63.50 per 
cwt on 4,607 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 281 loads selling with prices up $1.15 per 
cwt. Lean hog index for 2/5 is at $64.62 up $0.32, with a projected two-day 
index of $64.89, up $0.27. 

   Rick Kment can be reached at 


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