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DTN Midday Livestock Comments          08/22 12:22

   Cattle Futures Surge Higher on Short-Covering Gains Tuesday

   Aggressive triple-digit gains have quickly moved into cattle markets as 
feeder cattle futures have posted gains as high as $3 per cwt. This is helping 
to bring buyers back into the complex despite still weak market fundamentals. 

By Rick Kment
DTN Analyst


   Strong gains have flooded through cattle futures Tuesday morning following 
gains in feeder cattle markets which reached $3 per cwt through the morning. 
This is helping to draw gains as strong as $2 per cwt in many live cattle 
contracts. Lean hog futures remain under pressure as nearby contracts are 
holding triple digit losses. Corn prices are lower in light trade. September 
corn futures are 2 cents lower. Stock markets are higher in light trade. The 
Dow Jones is 161 points higher while Nasdaq is up 75 points.


   Strong triple-digit gains have surged into the complex with gains following 
the aggressive morning support seen in the feeder cattle futures. Triple-digit 
price moves are seen in nearly all contracts with traders focusing on the 
potential to square positions following the recent price pressure. Continued 
softness in fundamentals may lead to additional market softness long term, but 
the shift higher Tuesday is giving traders a reprieve from the consistent 
weakness over the last couple of weeks. Cash cattle is starting to show some 
light movement with some initial bids developing in the South at $106 per cwt. 
This is unlikely to get much feeder attention at this point, especially given 
the support in futures trade, but it is a starting point. Asking prices are 
seen at $112 in the South and $177 in the North, but active trade may not be 
seen until the later part of the week. Beef cut-outs at midday are higher, 
$0.01 higher (select) and up $0.73 per cwt (choice) with moderate movement of 
84 total loads reported (40 loads of choice cuts, 17 loads of select cuts, 17 
loads of trimmings, 10 loads of ground beef). 


   Sharp gains quickly developed Tuesday as short covering activity moved back 
into the feeder cattle complex even though very little directional change was 
seen in the overall cattle complex. Nearby feeder cattle futures are holding 
gains of $2 to $3 per cwt with traders focusing on the potential to draw 
additional underlying support and move prices above $142 per cwt once again. It 
is uncertain just how long this support will last as traders remain cautious 
given the upcoming cattle on feed report. 


   Triple-digit losses are seen once again in nearby lean hog futures trade 
even though light buyer support attempted to step into the complex through 
morning trade. The lack of support during the morning has allowed nearby 
contracts to break through short-term support levels, as October futures have 
fallen below $64 per cwt. The potential for additional technical pressure to 
develop along with already existing fundamental weakness through the end of the 
month could bring increased softness to the entire complex. Cash prices are 
lower on the National Direct morning cash hog report. The weighted average 
price fell $1.36 at $70.36 per cwt with the range from $67.00 to $71.50 on 
4,506 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct 
morning cash hog report. The weighted average price fell $0.96 at $70.60 per 
cwt with the range from $67.00 to $71.50 on 1,692 head reported sold. The 
National Pork Plant Report reported 225 loads selling with prices falling $2.43 
per cwt. Lean hog index for 8/18 is at $82.35 down $0.84 with a projected 
two-day index of $81.53, down $0.82.   

   Rick Kment can be reached at 


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