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DTN Midday Livestock Comments          08/17 11:53

   Sharp Losses Move into Futures Trade Following Fundamental Pressure  

   Aggressive losses have quickly developed in cattle and hog futures trade 
Thursday morning. The overall lack of support from cash and meat values through 
the end of the week is adding to liquidation activity and further market 
concerns. 

By Rick Kment
DTN Analyst

GENERAL COMMENTS: 

   Sharp triple-digit losses have quickly developed through midday with live 
cattle futures and lean hog futures posting losses above $2 per cwt as traders 
continue to focus on fundamental market weakness. Continued pressure through 
the end of the session could spark even more liquidation Friday. Corn prices 
are lower in light trade. September corn futures are 2 cents lower. Stock 
markets are lower in light trade. The Dow Jones is 145 points lower while 
Nasdaq is down 69 points.

   LIVE CATTLE:

   The combination of strong pressure developing in cash markets and beef 
values Thursday morning has added even more weakness to the complex. This has 
created additional pressure in nearby futures with trade seen $1.70 to $2 per 
cwt lower at midday. The inability to draw support back into the market has 
broken through last week's close of $106.60 in October futures. A move below 
support levels of $105.50 per cwt is expected to draw additional liquidation 
into all cattle markets. Cash trade has redeveloped through the morning at the 
same range as seen earlier in the week. Live trade is seen at $110 per cwt with 
moderate trade seen in Kansas at that level. Dressed prices through the north 
are seen at $175 to $177 per cwt. It is expected that most if not all of the 
needed trade will be wrapped up by the end of the day, which may continue to 
weaken the overall tone of the complex. Beef cut-outs at midday are lower, 
$0.47 lower (select) and down $1.85 per cwt (choice) with active movement of 
102 total loads reported (66 loads of choice cuts, 23 loads of select cuts, 1 
load of trimmings, 13 loads of ground beef). 

   FEEDER CATTLE:

   Triple-digit losses are seen through feeder cattle trade with the most 
aggressive losses once again seen in deferred contract months. August futures 
are holding a $1-per-cwt loss with the rest of the market flirting with losses 
near $2 per cwt. The aggressive $3-to-$4-per-cwt losses seen Wednesday have set 
up an extremely bearish market situation and allowed active liquidation to 
continue late in the week.  

   LEAN HOGS:

   Aggressive losses have once again developed through the complex with October 
futures posting a $2.07-per-cwt loss. This has pushed front-month contracts 
below $67 per cwt, and although markets remain in a technically sideways range, 
the inability to find support at current levels is bringing even more concern 
to the market. All nearby contracts are holding triple-digit losses, with the 
focus on weakness developing in cash and pork values adding to the market 
concerns. Cash prices are lower on the National Direct morning cash hog report. 
The weighted average price fell $1.10 at $75.29 per cwt with the range from 
$70.00 to $77.00 on 3,994 head reported sold. Cash prices are lower on the 
Iowa/Minnesota Direct morning cash hog report. The weighted average price fell 
$1.20 at $75.61 per cwt with the range from $70.00 to $77.00 on 1,684 head 
reported sold. The National Pork Plant Report reported 133 loads selling with 
prices falling $0.70 per cwt. Lean hog index for 8/14 is at $84.38 down $0.40 
with a projected two-day index of $84.03, down $0.35.   

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


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