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DTN Midday Livestock Comments          09/23 11:39

   Lean Hog Futures Lead Livestock Complex Higher

   Moderate to active buyer support is noted in livestock futures Thursday 
morning. Triple-digit gains are holding in most lean hog futures contracts as 
prices have moved away from support price levels following early week pressure. 
Cattle trade has continued to firm, although limited buyer support is seen at 

By Rick Kment, Contributing Analyst


   Active gains flooded lean hog futures trade Thursday morning with December 
through July contracts up $2 to $3 per cwt at midday. Underlying pressure seen 
early in the week has run its course, allowing for firm commercial buying to 
redevelop near the end of the week. With the monthly Cattle on Feed report and 
quarterly Hogs and Pigs reports both released Friday afternoon, the focus on 
changing inventory levels and impact on supplies over the next year will 
continue to be a key trading factor over the next couple of days. December corn 
is up 2 3/4 cents per bushel and December soybean meal is down $0.80 per ton. 
The Dow Jones Industrial Average is up 510 points with Nasdaq adding 127 points.


   Live cattle futures trickle higher in limited morning trade Thursday. The 
ability to sustain midweek price support is the major takeaway from morning 
activity as uniform price gains are seen across the entire livestock complex. 
October futures are showing limited gains of 2 cents per cwt at midday, 
although the most active support of 40 to 50 cents per cwt is seen through the 
second quarter of 2022 contracts. The focus on supply tightness into next year 
is helping slowly draw traders back to the table, although market stability 
seems to be the consensus of the entire complex. Beef in the weekly report 
posted total export sales of 15,800 metric tons (mt) while shipments last week 
of 18,200 mt were reported. Japan, South Korea and China were the top three 
destinations for new sales and shipments for the week. Additional focus is also 
expected to be put on Friday's Cattle on Feed report. This may not bring about 
wide market shifts over the next two days but could cause moderate position 
adjustments ahead of the report. Pre-report estimates are pointing to total on 
feed numbers at 98.1% of year-ago levels. This estimate would put total on feed 
numbers at 11.17 million head on Sept. 1. Typically cattle on feed levels post 
yearly lows in September. The current estimate indicates seasonal lows may have 
already been seen in the August report. Cash cattle markets remain quiet 
Thursday morning following light to moderate trade which developed Wednesday. 
Trade in the North on a dressed basis was seen from $193 to $198 per cwt with 
most trade at $198 per cwt. This is generally $1 per cwt lower than last week's 
weighted average. Live trade in the South developed at $123 to $124 per cwt, 
which is steady with last week. The amount of trade reported Wednesday is 
likely to have set the tone for the week and could be the bulk of needed trade 
this week. But it is still likely a few additional sales will trickle into the 
market over the next two days. At this point, it is not likely many are willing 
to hold out until after Friday's Cattle on Feed report to trade cattle. Asking 
prices on cattle still left on showlists remain at $200 in the North and $125 
live basis in the South. Thursday morning's boxed beef prices are lower in 
light trade, with choice cuts $0.43 lower at $307.40 and selects down $0.69 at 
$274.81 on a total count of 52 loads. Dow Jones estimated Thursday's cattle 
slaughter at 118,000 -- 3,000 less than a week ago and 4,000 less than year ago 


   Light buyer support is trickling back into feeder cattle markets Thursday 
morning as widespread buyer support in nearly all outside markets and 
aggressive gains in stock prices have stimulated buyer activity. Very little 
new fundamental market direction is seen during morning trade, although it is 
likely noncommercial traders are starting to retest the market following 
several weeks of liquidation. Traders are also starting to focus on Friday's 
Cattle on Feed report. Early estimates point to a 1% drop in placements during 
August compared to 2020. But this estimate has the widest range between survey 
recipients, which could bring additional volatility to the market. Given the 
amount of early placements this year, it is quite possible placements could be 
much lower than estimated, which could spark aggressive market gains early next 
week. The CME Feeder Index was priced at $153.57 for Sept. 21.


   Lean hog futures have finally broken out of the market slide which has 
consumed the complex for the last week. This has created a buy opportunity in 
all contracts with December through July futures holding gains above $2 per cwt 
at midday. December lean hog futures are leading the complex higher with gains 
near $3 per cwt, as traders focus on renewed underlying support from commercial 
and noncommercial traders. Pork export sales last week were reported at 32,600 
mt while shipments posted 36,100 mt. China new purchases were somewhat 
disappointing with only 900 mt moving to the country. Mexico was the big buyer 
last week with exactly half of all weekly export sales moving to Mexico. 
Traders are also starting to focus on Friday's Quarterly Hogs and Pigs report. 
Although this report typically isn't a huge market mover, it is important 
because it helps to indicate both current supply situations and future supply 
intentions of the industry. Cutouts are up $4.55 at $111.47 Thursday morning on 
151.21 loads. Negotiated hog prices are reported at $76.72 per cwt on 3,475 
head. Due to unreported morning cash prices Wednesday, price comparisons are 
not available. Dow Jones estimated Thursday's hog slaughter at 476,000 -- 2,000 
less than a week ago, while 7,000 more than year ago levels. The CME Lean Hog 
Index is estimated at $91.89 for Sept. 22.

   Rick Kment can be reached kmentrick@gmail.com

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