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DTN Midday Livestock Comments          10/25 11:45

   Buying Redevelops Across Cattle Futures

   Cattle markets bounced higher Monday morning in reaction to reduced cattle 
placement and on-feed numbers in Friday's report. Triple-digit gains are 
holding in live cattle and feeder cattle trade Monday morning as traders try to 
offset the extreme bearishness held by the complex over the last couple of 
weeks. Lean hog futures are mixed in limited activity Monday as the overall 
tone of the market remains weak.

By Rick Kment, Contributing Analyst

   GENERAL COMMENTS:

   Triple-digit gains have flooded live cattle and feeder cattle futures as 
traders react to the bullish news seen in Friday's cattle on feed report. With 
cattle placements in September falling below early analyst estimates and below 
the overall range of estimates, buyer support has ensued through morning trade. 
Live cattle futures are holding gains of $1 to $1.50 per cwt, while feeder 
cattle futures are $1 to $2.50 per cwt higher in most contract months. Although 
spill-over support is seen in December lean hog futures from positive cattle 
support, the overall hog complex remains unsettled as traders continue to 
search for demand support over the coming months. December corn is down 2 3/4 
cents per bushel and December soybean meal is down $1.00 per ton. The Dow Jones 
Industrial Average is up 33 points with Nasdaq up 73 points.

   LIVE CATTLE

   Active gains aggressively swept through live cattle trade Monday morning as 
traders couldn't wait to trade the bullish news from last Friday's cattle on 
feed report. With lower total on-feed numbers and cattle placements from year 
ago levels, the focus on regaining market support was evident as prices moved 
$1 to $1.50 per cwt higher through morning trade. Although, at this point, the 
early week support is not enough to wipe out the bearish trend of the market. 
The focus on increased prices support may be enough to help stimulate 
commercial buying activity over the upcoming days. A move higher and stronger 
weekly close going into the end of October could be the sign traders have been 
looking for over the past two months. There remains only limited fundamental 
support in the cattle complex at this point, but sustained distance from last 
week's lows could spark additional buyer support through the cattle complex. 
Cash cattle activity remains dead in the water Monday morning, although this is 
not unexpected or unusual for this early in the week. Showlist distribution and 
inventory taking continues to be the focus through all areas of cattle country 
Monday, and it is likely that more interest may not develop until midweek or 
later. Asking prices are not established, but given the stability in cash 
cattle prices over the last several weeks, it is not expected that significant 
shifts develop in initial asking prices or bids seen later in the week. Monday 
morning's boxed beef prices are lower in moderate trade, with choice cuts $1.59 
lower at $280.23 and selects down $0.92 at $262.19 on a total count of 77 
loads. Dow Jones estimated Monday's cattle slaughter at 120,000, steady with a 
week ago and 5,000 more than year-ago levels.

   FEEDER CATTLE

   Friday's cattle on feed report lent some much-needed support to the cattle 
markets with cattle placements falling below pre-report estimates and the 
entire range of analyst projections. The focus last week seemed to dwell on the 
expectation of another bearish report, but the lack of this bearishness sparked 
triple-digit gains Monday morning. Although feeder cattle futures have pullback 
back from initial morning gains, prices are still trading $1 to $2.50 per cwt 
higher in most contract months. October futures are having a hard time finding 
buyer support Monday morning as trade volume remains extremely light and there 
appears to not be enough momentum in the near-term contract to regain recent 
pressure. The focus on November and January futures, which have quickly offset 
Friday's losses, could help to sustain follow-through buyer support across the 
complex. Although the lower placement numbers are bullish, this is still not 
enough change in market fundamentals or technical factors to abruptly change 
the overall tone of the market in the upcoming days. If current support can 
hold through the week, the potential to build on this momentum may help to set 
a recovery pattern for feeder cattle futures which tumbled over $13 per cwt 
over the past two months. The CME Feeder Cattle Index was priced at $155.11 for 
Oct. 21.

   LEAN HOGS

   Despite moderate price support trickling into spot December month lean hog 
contracts, the underlying tone of the market remains fragile at best. Last 
week, December lean hog futures fell $4.95 per cwt, with February contracts 
falling $4.70 per cwt. Front month futures have tumbled over $12 per cwt lower 
over the last month and continue to test long-term support set during early 
2021. Even though significant price support developed in late September due to 
supply tightness, the growing concern through the pork complex is now resting 
on the uncertainty of sustaining and growing current pork demand. Demand 
support needs to be seen in both domestic and export markets through the next 
six months, which seems to be a concern to traders at this point. For the short 
term, trade is expected to remain mixed Monday with very little directional 
market shifts likely in the immediate future. This could easily keep prices 
holding in the current pattern through the rest of October. Wholesale pork 
prices firmed following aggressive gains in belly cuts, which rallied $23.35 
per cwt Monday morning. This offset firm pressure in butt and picnic cuts. 
Cutouts are up $2.24 at $100.51 Monday morning on 157.76 loads. Negotiated hog 
prices are $0.59 lower at $63.64 per cwt on 4,842 head. The swine/pork market 
formula price is listed at $82.70 per cwt. Dow Jones estimated Monday's hog 
slaughter at 476,000, 1,000 more than a week ago, while 10,000 less than year 
ago levels. The CME Lean Hog Index is listed at $83.70 per cwt for Oct. 21.

   Rick Kment can be reached kmentrick@gmail.com




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