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DTN Midday Livestock Comments          12/06 11:57

   Red Hot Hog Futures Lean Meat Complex Higher at Midday

   Hog futures are blasting to new highs at midday, powered by technical buying 
and ideas that the country is turning the corner toward more manageable 
fundamentals. The cattle complex is also sharply higher in late-morning 
business with aggressive short covering triggered by spillover bullish from the 
lean hog market and the tall premium status of late week's feedlot trade. 

By Rick Kment
DTN Livestock Analyst

GENERAL COMMENTS: 

   Feedlot country is generally quiet as we move toward the top of the noon 
hour. Some bids of $112 have been identified in the South. Asking prices are 
now well defined, but we know of some ready steers and heifers in Kansas and 
Texas priced around $115. According to the midday report, the national hog base 
is 0.83 higher compared with the Prior Day settlement ($43.50-50.50, weighted 
average $48.36). Corn futures are several cents higher right before midday, 
supported by follow-through buying and confirmation of extremely strong ethanol 
sales in October. The stock market is mostly flat at this time as investor fret 
over the Fed's next move. The Dow is 13 points higher near midday with the 
Nasdaq positive by 5. 

   LIVE CATTLE: 

   Through midmorning, live contracts seemed to be stuck in the same old gear 
of indecision. But buying energy suddenly took hold around midsession, no doubt 
boosted to some extent by the surging bullishness in the lean hog trade. Prices 
are 95 to 150 higher with spot Dec now almost 200 points above its early 
session low. If the basis can continue to weaken like this, feedlot managers 
will find it easier to dig in their boots in terms of higher asking prices. 
Beef cut-outs some higher at midday, up 0.24 (choice, $191.63) to 0.25 (select, 
$173.48) with light box movement (30 loads of choice cuts, 14 loads of select 
cuts, a half load of trimmings, 11 loads of coarse grinds).

   FEEDER CATTLE: 

   Like their live counterparts, feeder issues got off to a sluggish start. Yet 
bulls have really picked up steady near midday, responding both to outside 
markets and the substantial premium of the cash index. Triple-digit gains 
dominate the market with prices currently 165 to 207 higher.

   LEAN HOGS: 

   Hog bulls are clearly through the party at the CME with contracts now 
willing to race again of spot cash news, confidently anticipating tighter 
supplies and decent demand over the next several quarters. Currently 67 to 247 
points higher, most contracts are scoring multi-months higher, generating more 
attractive technical signs in the process. The carcass value at midday is 
solidly higher, supported by better demand for fresh cuts and well as rib and 
belly items. Pork cut-out: $74.03, off .29. CME cash lean index for 12/02: 
50.56, up 1.04 (DTN Projected lean index for 12/05: 51.03, up 0.47). 

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


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