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DTN Midday Livestock Comments          03/22 11:44

   Early Cattle Gains Eroding Quickly

   Strong triple-digit gains in the cattle complex have started to evaporate as 
renewed selling pressure is moving into the market at midday. 

By Rick Kment
DTN Analyst


   Cattle futures have posted strong early gains in the live and feeder cattle 
markets. However, a swift move away from the morning support has people 
wondering if prices will actually close lower. This is creating increased 
volatility in the lightly traded cattle complex late Thursday. Hog futures have 
posted firm losses with limited interest seen through the entire complex. Corn 
prices are lower in light trade. May corn futures are a 1/2 cent lower 
Thursday. Stock markets are lower in light trade. The Dow Jones is 440 points 
lower, while Nasdaq is down 129 points.


   Early gains in live cattle trade has helped bring buyer activity to the 
complex Thursday morning. Prices posted firm triple-digit support through most 
of the morning activity, although prices are starting to fade near midday. The 
inability to hold these early gains will create a significant market challenge 
for prices to move higher in the near future. Buyer support seemed to be firm, 
but the light trade activity can quickly be washed out of the market. There 
continues to be such a strong underlying bearish tone to the cattle complex 
that it is going to take aggressive buyer support in order to sustain early 
market rallies. Cash cattle interest is generally undeveloped Thursday morning. 
Although there could be some additional follow through activity moving into the 
market over the next couple of days, packers may have gained access to enough 
cattle to get through the upcoming holiday week. Bids are undeveloped in all 
areas Thursday morning, while asking prices on any cattle left for sale listed 
near $127-to-$128 live basis and $203 dressed. Trade seen early in the week has 
eroded market support given the pressure in futures activity. This is pushing 
prices generally $2-to-$5 per cwt lower than last week following the weaker 
Northern trade which developed Wednesday afternoon. Boxed Beef cut-outs at 
midday are higher, $1.77 higher (select) and up $1.33 per cwt (choice), with 
light movement of 47 total loads reported (35 loads of choice cuts, eight loads 
of select cuts, no loads of trimmings, three loads of ground beef). 


   Buyer support quickly moved back into feeder cattle as firming support seen 
early Thursday helped spark additional interest through the live cattle 
complex. Feeder cattle markets are holding firm triple-digit gains in all 
contract months at midday, although prices have slowly backed away from session 
highs due to limited trade volume. March cattle futures are holding a $1.02 per 
cwt gain. Current market support is essentially erasing the pressure seen in 
the complex Wednesday, but the sharp losses seen previously in the week 
continue to limit any long-term positivity  


   Strong morning buyer support in the cattle complex has had the opposite 
effect on hog trade during the morning. Strong triple-digit losses have quickly 
flooded through all nearby contracts as traders continue to focus on the 
inability to draw support or stability. Prices through October trade are 
holding triple-digit losses with June futures taking the lead, as prices have 
eroded $1.85 per cwt lower during morning activity. The inability to keep 
markets stable through the end of the week adds even more bearishness to the 
already weak market structure. Cash prices are unavailable at this time on the 
National Direct morning cash hog report. Cash prices are unavailable at this 
time on the Iowa/Minnesota Direct morning cash hog report. The National Pork 
Plant Report posted 185 loads selling with carcass values falling $0.32 per 
cwt. Lean hog index for 3/20 is at $63.63, down $0.66 with a projected two-day 
index of $63.03, down $0.60.

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


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