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DTN Midday Livestock Comments          08/16 11:55

   Hog Futures Erode Friday Morning 

   Sharp triple-digit losses developed in lean hog futures as technical 
pressure triggered additional sell signals. This added increased pressure to 
the entire complex.

By Rick Kment
DTN Analyst

General Comments

   Hog futures are showing significant pressure midday Friday as strong initial 
gains quickly evaporated as technical reversal triggers have developed. Nearby 
futures are holding losses more than $2 per cwt. Cattle trade remains firm, but 
well off morning highs. Corn futures are steady to lower in limited trade 
volume. September corn futures are higher. Stock markets are higher in light 
trade. Dow Jones is 282 points higher with NASDAQ up 127 points. 


   Limited futures activity is seen Friday morning with traders holding onto 
moderate gains which developed early in the session. The wide price swings seen 
earlier in the week seem to have subsided, as traders try to find market 
support at current levels. With August futures hovering just above $100 per 
cwt, while October futures remain near long term and contract lows under $99 
per cwt, the focus is moving toward the weakness in cash cattle trade. Strong 
underlying support in beef values over the last couple of days has done very 
little to spark interest in cash spot month futures activity. Cash cattle trade 
remains quiet following sharply lower prices earlier in the week. Live trade 
developed in the South at $105 per cwt Wednesday, roughly $5 per cwt lower than 
last week. Dressed trade seen at $172 once the dust settled in the North was 
$10 per cwt lower. There are a few bids at $106 live in Nebraska still on the 
table, but it appears that both sides may call it a week and hope for better 
results next week. Boxed Beef cut-outs at midday are higher, $2.00 higher 
(select) and up 1.73 (choice) with moderate light of 57 total loads reported 
(37 loads of choice cuts, 6 loads of select cuts, 4 loads of trimmings, 9 loads 
of ground beef).


   Feeder cattle futures have been unable to hold morning highs as limited 
support is seen at midday. The inability not only to bring additional strong 
buying back into the complex, but to flirt with lower prices through the last 
couple hours of trade is weakening the potential of the recent market rally in 
the last couple of days. August and September contracts are holding gains of 35 
to 37 cents per cwt. There still remains a lot of uncertainty as to how much 
follow-through pressure will develop over the next few weeks as packers 
struggle with reduced plant capacity, even though production is being shifted 
around the country over the last few days. 


   Lean hog futures tumbled lower midday as a combination of renewed technical 
selling and fundamental pressure quickly eroded morning optimism. The swift 
shift lower in morning cash hog prices combined with additional softness in 
pork values left traders unwilling to hang onto early gains as increased 
widespread weakness is developing. October lean hog futures posted a strong 
market reversal Friday morning, as triple-digit losses have moved to $63.20 per 
cwt at midday. This moves through long-term support levels of $63.25 per cwt 
seen exactly one year ago on August 16, 2018. The inability for front month 
futures to hold above these price levels at the end of the session would likely 
spark additional technical triggers early next week. Cash prices are lower on 
the National Direct morning cash hog report. The weighted average price is down 
$1.23 at $68.91 per cwt with the range from $59 to $74 on 5,588 head reported 
sold. Pork values continue to steadily erode and moderate pressure developed in 
all but rib cuts Friday. Pork cutouts fell $0.41 per cwt at $87.82 per cwt with 
210 loads traded. Lean hog index for 8/14 is $79.34, down 0.52, with a 
projected two-day index is $79.02, down 0.32.

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


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