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DTN Midday Livestock Comments          07/22 11:32

   Active Support Develops in Cattle Futures 

   Feeder cattle futures posted triple-digit gains with increased support 
developing as grain markets eroded Monday morning. Traders continue to focus on 
stable supply levels, sparking unified support Monday.

By Rick Kment
DTN Analyst

General Comments

   Limited trade seen early Monday morning allowed for narrowly mixed market 
shifts. Renewed buyer support quickly moved into cattle futures, helping to 
push feeder cattle to triple-digit gains based on underlying bullish support 
through the entire complex. Hog futures remain mixed in sluggish trade. Corn 
futures are lower in light trade. September corn futures are 7 cents lower. 
Stock markets are mixed in light trade. Dow Jones is 7 points lower with NASDAQ 
up 50 points. 


   Moderate support slowly developed Monday morning following narrow early 
morning trade keeping prices mixed. With increased volume moving into the 
complex, the focus on increased buyer support in remaining 2019 contract months 
helped to spark underlying support through the entire complex. August futures 
are leading the market higher with 70 cent gains at midday, pushing spot prices 
above $108 per cwt. These levels continue to hover near last week's highs, as a 
move above $108.50 per cwt in August futures would help to spark additional 
underlying buyer support in not only spot trade, but most nearby contracts. 
Cash cattle interest remains silent Monday morning with show list distribution 
and inventory taking the agenda in all areas of cattle country. Bids and asking 
prices are unavailable, and likely to not be active until midweek or later. It 
is uncertain how much focus will be placed on early-week trade this week 
following cash market activity trickling into the complex in the final three 
days last week. Boxed Beef cut-outs at midday are mixed, $0.17 higher (select) 
and down $0.23 per cwt (choice) with light movement of 46 total loads reported 
(16 loads of choice cuts, 10 loads of select cuts, 12 loads of trimmings, 7 
loads of ground beef).


   Buying quickly moved into feeder cattle trade Monday morning following 
limited initial market direction. Continued pressure in corn prices which 
reduced overall expected feeder costs has helped to spark triple digit gains in 
most contract months. August futures are trading $1.40 per cwt higher with 
September contracts leading the complex higher with a $1.62 per cwt rally. The 
recent buyer support has pushed all nearby contracts above $141 per cwt, 
helping to sustain the bullish market shift as traders continue to focus on 
long-term support through the entire complex. With feeder cattle placements in 
Friday's report at expected levels, traders are now focused on the potential 
that overall cattle numbers may become slightly more manageable through the end 
of the year than previously expected.


   Mixed trade is seen in lean hog trade with traders split between 
follow-through buyer support and early week position taking. Spot-month August 
futures are leading the complex lower with $1.37 per cwt losses as an 
early-week correction is developing following the extended market rally over 
the last couple of weeks. Outside of nearby contracts, firm buyer support 
remains, although gains have backed away from session highs, the focus on 
underlying bullish market support across the complex is helping to draw 
additional buyers into early 2020 contracts. This should help to bring 
additional support to market prices as traders look for increased confirmation 
from cash and pork values at the end of the day. Cash prices are higher on the 
National Direct morning cash hog report. The weighted average price is up $0.20 
at $72.44 per cwt with the range from $62 to $79 on 5,606 head reported sold. 
Pork values moved sharply higher following a gain of nearly $19 per cwt in pork 
bellies. Pork cutouts gained $4.70 per cwt at $83.23 per cwt with 70 loads 
traded. Lean hog index for 7/18 is $72.40, up 0.88, with a projected two-day 
index is $73.27, up 0.87.

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


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