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DTN Midday Livestock Comments          10/30 11:49

   Sharp Losses Develop in Hog Futures               

   Lean hog futures have tumbled lower Thursday morning as continued 
fundamental market weakness is creating concerns about just how much additional 
support will be seen in the overall hog complex through the end of the year. 
Cattle markets remain mixed in a narrow range at midday. 

By Rick Kment
DTN Livestock Analyst



GENERAL COMMENTS: 

   Sharp losses have developed through lean hog futures trade through the 
morning Thursday. Strong triple-digit losses are seen in nearly all nearby 
contracts, as weaker cash hog and pork values once again raise questions about 
how much additional support can be developed given growing supplies. Cattle 
futures are mixed in a generally narrow range as traders continue to focus on 
the ability to maintain overall demand at current price levels. Corn prices are 
lower in light trade. December corn futures are 1/2 cent per bushel lower. 
Stock markets are higher in light trade. The Dow Jones is 155 points higher 
while Nasdaq is up 2 points.

   LIVE CATTLE:

   Movement in live cattle trade has been all over the place through the 
morning Thursday. This is creating both a sense of stability given that prices 
are unable to move significantly in any direction, but it is also creating a 
lot of nervousness as traders are waiting for the "next big market break" to 
develop. At midday, contracts are trading slightly higher in nearby contracts, 
while deferred pressure is creating concerns about future market softness. This 
back and forth through the complex could continue to be seen through the end of 
the session. Cash cattle trade is still at a standstill, although there are a 
few bids developing in Kansas at $165 to $167 per cwt. But given the support 
last week in the market, it is unlikely that anything less than steady will get 
a second look before midday on Friday. Asking prices continue to hold at $172 
and higher in the South and $270 and higher in the North. But given the latest 
market surges, it is uncertain just how aggressively to price cattle at this 
point. Beef cut-outs at midday are lower, $0.03 per cwt lower (select) and down 
$0.02 per cwt (choice) with moderate movement of 95 total loads reported (41 
loads of choice cuts, 24 loads of select cuts, 21 load of trimmings, eight 
loads of ground beef).

   FEEDER CATTLE:

   Initial support in the feeder cattle market and cattle complex in general 
was short lived Thursday morning. Front month October contracts are still able 
to hold a strong gain of 75 cents per cwt, based on initial support and lack of 
additional volume seen through the complex. But the rest of the complex remains 
under significant pressure as momentum seems to be fading quickly. Even with 
this latest round of pressure it is still premature to dig the cattle market a 
grave, as we have seen the market come back from what was thought to be a 
certain demise several times over the last few months, only to draw more 
attention and push prices even higher. 

   LEAN HOGS:

   Strong pressure is redeveloping across lean hog futures trade Thursday 
morning as any stability seen in nearby prices has quickly eroded. December 
contracts are leading the plunge lower with losses hovering around the $2 per 
cwt loss at midday. The additional weakness in both the cash and pork cutout 
markets should be no surprise to futures traders, but there is little long-term 
support expected to redevelop over the near future which could help to give 
support to both nearby and deferred price levels. Cash prices are unreported 
due to confidentiality on the Iowa Minnesota Direct morning cash hog report. 
The National Pork Plant Report is reported 208 loads selling as prices falling 
$1.45 per cwt. Lean hog index for 10/28 is at $94.61 down 1.98, with a 
projected two-day index of $93.03 down 1.58.

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


(SK)

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