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DTN Midday Livestock Comments          09/17 11:39

   Widespread Market Pressure Hits Livestock Futures

   Strong market weakness is seen in nearly all commodity and financial markets 
Friday morning. This is directly affecting livestock futures as traders quickly 
pull back from gains of earlier in the week. Fundamental market factors seem to 
have little relevance Friday as traders follow outside markets lower.

By Rick Kment, Contributing Analyst


   Universal pressure is seen through the entire livestock complex as traders 
quickly back away from support seen earlier in the week. The combination of 
widespread outside market losses and end-of-week position adjustments has 
allowed for most cattle and hog futures to trade 50 cents to $1 per cwt lower 
Friday morning. Without a significant shift in outside market moves, it is 
likely prices will continue to hover in this lower region through the end of 
the session. Given the volatility in both cattle and hog markets over the week, 
a late-week correction of this level is not unexpected or necessarily 
indicating future market moves. December corn is down 4 1/4 cents per bushel 
and December soybean meal is down $1.10 per ton. The Dow Jones Industrial 
Average is down 195 points with Nasdaq falling 147 points.


   Moderate price weakness is seen in live cattle futures Friday with losses 
from 60 to 80 cents per cwt at midday. Noting the strong upward market shift in 
futures earlier this week, all contracts are holding well above support prices 
set Monday. October futures are trading above $123 per cwt at midday, which 
comfortably remains above early week lows of $122.27 per cwt. The ability to 
hold prices above these levels over the next couple of weeks should spark 
underlying technical and fundamental buyer support. Traditionally, prices 
bottom out in the week or two following Labor Day, with moderate to strong 
strength building through the end of the year. Moves in cattle trade appear to 
be on track with previous market trends, but outside market uncertainty and 
concerns of a cooling economy and increased COVID could weaken trader optimism 
in the near future. Cash cattle trade remains silent Friday morning with bids 
very scarce and asking prices not budging from earlier price points. Although a 
few clean-up deals may take place through the end of the day, overall cash 
cattle trade is likely to be essentially finished for the week. Both sides 
appear to be more than willing to hold out on any significant additional deals 
until next week. Asking prices on cattle still on showlists remain at $124 and 
higher live and $200 and higher dressed. Trade Wednesday set the tone for the 
week with live trade mostly $123 ton $124 per cwt and Northern dressed deals 
are mostly $200. Prices are generally steady to $1 per cwt lower, but the 
weighted average prices will be released Monday, giving a better idea where 
overall sales prices stacked up with the previous week. Friday morning's boxed 
beef prices are mixed in light to moderate trade, with choice cuts $1.92 lower 
at $316.08 and selects up $2.27 at $282.54 on a total count of 86 loads. Dow 
Jones estimated Friday's cattle slaughter at 119,000 -- 1,000 higher than a 
week ago and 7,000 more than year ago levels.


   Widespread pressure in nearly all markets is putting additional weight on 
feeder cattle Friday morning. Volume has remained generally quiet through the 
first couple hours of trade, but September and November futures are holding 
triple-digit losses. Continued pressure in live cattle trade is also adding 
questions of further short-term price support in feeder cattle trade as late 
2021 and most 2022 contracts have now taken out support levels which developed 
earlier in the week. Even though September and October futures are currently 
holding above these price support levels, the concern that renewed market 
pressure will continue to develop in feeder cattle trade is limiting optimism 
through the next several weeks across both the feeder and live cattle futures. 
The CME Feeder Index was priced at $154.02 for Sept. 15.


   Following the aggressive market rally over the past two trading sessions in 
nearby lean hog futures, traders have focused on adjusting positions ahead of 
the weekend, with moderate losses seen in all traded lean hog contracts through 
Friday morning. October futures are leading the trend lower with a 90-cent 
loss. Even with the current pressure in the market, nearby futures have seen 
significant and impressive market rallies through the week. Limited fundamental 
direction is likely to be seen in any livestock trade with outside market 
direction the biggest mover of the entire hog complex. Traders next week will 
likely get back into the groove as fundamental market indicators will be front 
and center as traders look for increased direction from cash hog trade and pork 
values during the last half of September. Pork cutout prices surged higher 
following aggressive double-digit gains in ham and belly cuts. Ham prices 
increased $20.82 per cwt on the morning report with belly cuts surging $15.88 
per cwt, heavily impacting carcass values. Cutouts are up $6.13 at $112.10 
Friday morning on 218.41 loads. Negotiated hog prices are $0.04 lower per cwt 
with a weighted average price of $81.57 per cwt on 3,905 head on the National 
Direct Morning Hog Report. The swine/pork market formula price is listed at 
$92.53 per cwt. Dow Jones estimated Friday's hog slaughter at 473,000 -- 2,000 
less than week ago and 10,000 more than year ago levels. The CME Lean Hog Index 
is estimated at $94.26 for Sept. 16.

   Rick Kment can be reached

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