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DTN Midday Livestock Comments          12/02 11:21

   Lean Hog Futures Quiet Within Well-Tested Price Range

   Cash cattle deals this week are being marked at mostly $155 live basis 
(steady with last week) or $249 dressed basis ($4 higher than last week), 
although additional volume later on Friday could reveal more about packers' 

Elaine Kub
Contributing Analyst


   Cash cattle deals this week are being marked at mostly $155 live basis 
(steady with last week) or $249 dressed basis ($4 higher than last week), 
although additional volume later on Friday could reveal more about packers' 
appetites. Meanwhile, more losses in the feed grains markets have set the 
feeder cattle futures contracts knocking at last week's highs, and lean hogs, 
too, are following through on their recent recovery with additional gains 
Friday. December corn is down 14 cents per bushel and December soybean meal is 
up $0.40 per ton. The Dow Jones Industrial Average is down 51 points.


   The November jobs number came in better than expected Friday morning, and a 
strong economy is generally supportive to the beef and cattle markets, but 
stock market prices aren't necessarily surging in response, and live cattle 
futures are showing only mild gains so far Friday. December live cattle are up 
$0.40 at $153.45, February live cattle are up $0.625 at $156.05 and April live 
cattle are up $0.475 at $159.725. Rather than reacting to outside market 
influences and obscure economic numbers, live cattle futures traders appear to 
be guided by the cash market this week, which churned higher yet again. 
Southern live cattle sales have been marked at mostly $155, fully steady with 
last week's weighted averages and faithfully reflected in the nearby futures 
prices. Northern dressed deals were marked at mostly $249, $4 higher than last 
week's weighted averages. More volume is expected to trade on Friday, and 
asking prices for cattle left on showlists are around $157-plus in the South 
and $250 to $252 in the North. Friday's slaughter is estimated at 123,000 head, 
which is 3,000 more than a week ago and also 3,000 more than a year ago at this 
time. It's expected to be followed by a Saturday kill of 38,000 head.  

   Boxed beef prices are mixed Friday morning: choice down $2.02 ($251.55) and 
select up $0.66 ($225.66), tightening the spread, with a movement of 46 loads 
(30.54 loads of choice, 5.26 loads of select, 0 loads of trim and 10.15 loads 
of ground beef).


   Nearby feeder cattle futures contracts have been the leader of gains in the 
livestock sector so far Friday morning. January feeders are up $1.325 at 
$182.40, March feeders are up $0.85 at $185.15 and April feeders are up $0.60 
at $188.40.  This sort of performance may simply be the kneejerk reaction of 
futures traders and their algorithms on a day when nearby corn futures are 
falling by double-digits, but the charts are certainly within striking distance 
of last week's highs, and if trading volume picks up during the afternoon, 
there is a possibility of developing fresh bullish momentum in this market. 
Contracts for timeframes past mid-2023 are already trading above $200 per cwt, 
so in some senses, the psychological resistance against pursuing historical 
highs has already been broken.


   Low trading volume so far during the Friday trading session has given the 
lean hog futures contracts some gently higher prices. December lean hogs are 
down $0.375 at $82.75, February lean hogs are up $0.425 at $89.625 and April 
lean hogs are up $0.925 at $95.175. At these levels, the charts are staying 
inside comfortable, well-tested previous trading ranges, no longer at the 
volatile whim of whichever bullish or bearish sentiment was wafting off of 
Chinese COVID-19 headlines. The situation there seems to be resignation that 
imports of many commodities (including pork) are likely to still be limited by 
Covid and its associated restrictions on consumers, but provincial governments 
have responded to some of the protests and the fear of a more draconian 
lockdown seems to have passed. Here in the U.S., pork prices and hog prices 
have been dented this week, and although packers' slaughter pace remains 
aggressive, there seems to be no bullish urge to bid up the market value for 
stable swine supplies at this point. Friday's slaughter is projected at 487,000 
head, which is 17,000 more than a week ago and 15,000 more than a year ago at 
this time. Saturday's hog slaughter is projected at 139,000 head, which is less 
than half what was seen during last Saturday's Thanksgiving catchup, but is 
nevertheless a sustainable volume.

   The projected CME Lean Hog Index for Nov. 30 is down $0.65 at $83.24 and the 
actual index for Nov. 29 was down $0.32 at $83.89. Friday's Daily Direct 
Morning Hog Report showed a weighted average price of $81.88 (down $3.18) on 
3,350 head. Prices ranged from $81 to $88, and the five-day rolling average is 
now $84.70. Pork cutouts total 235.80 loads with 219.91 loads of pork cuts and 
15.90 loads of trim. Pork cutout values: up $2.62, $89.14.


   Cattlemen are eager for supply and demand mechanics to swing their way, but 
the market isn't completely free of hurdles as bearish concerns about the U.S. 
and global economies loom. Hear DTN Livestock Analyst ShayLe Stewart's thoughts 
on the 2023 cattle market at the all-virtual DTN Ag Summit on Dec. 12-13. Full 
details available at http://www.dtn.com/agsummit

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