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DTN Midday Livestock Comments          02/22 12:06

   Wide Ranging Price Shifts Add Volatility to Livestock Trade  

   Cash cattle trade has started to develop through the morning with not only 
sales seen on the Fed Cattle Exchange, but feedlot trade is reported in both 
the North and South. Sharp triple-digit gains seen in live cattle trade is 
being offset by sharp triple-digit losses across the lean hog complex. 

By Rick Kment
DTN Analyst


   Triple-digit price shifts have quickly overcome the livestock complex 
Wednesday morning. Triple-digit gains seen in nearby live cattle futures have 
pushed front-month February futures over $2.50 per cwt higher based on 
fundamental support. The lean hog futures complex on the other hand is seeing 
triple-digit losses in all 2017 contracts as traders are quickly backing away 
from previous support that has developed through the month of February. Corn 
prices are steady to higher in light trade. March corn futures are 1 1/2 cent 
higher. Stock markets are mixed in light trade. The Dow Jones is 16 points 
higher while Nasdaq is down 6 points.


   Strong commercial support is flooding back into the live cattle complex with 
prices in front month February contracts quickly surging to triple-digit gains 
during the morning. Currently front month futures are holding a $2.60 per cwt 
rally. This support comes as a combination of follow-through support developed 
Tuesday as well as firming cash and boxed beef values. April futures are also 
holding triple-digit gains, although the significantly larger open interest in 
April contracts is limiting the overall price volatility to a degree. February 
futures are trading at $121.70 per cwt, with April contracts nearing $117 per 
cwt at midday. Cash cattle trade is starting to develop late Wednesday morning 
in with both the Fed Cattle Exchange trading and feedlot trade starting to 
develop. Feedlot trade is reported at $125 live basis and $195 dressed basis. 
Although at this point trade remains extremely light, prices are $5 to $6 per 
cwt higher from last week's level giving the indication of continued support 
through the upcoming days. The Fed Cattle Exchange Auction report today listed 
a total of 3,350 head, with 3,065 actually sold, and 285 head listed as unsold. 
The state by state breakdown looks like this: KS 378 head at $122.50-$123.00; 
NE 1,890 head at $120.00-$123.25; TX 797 head, at $121.25-$124.50; CO no test; 
IA no test; other states no test. The weighted average was $122.10, up from 
last week's weighted average of $119.04. Beef cut-outs at midday are higher, 
$0.60 higher (select) and up $2.37 per cwt (choice) with moderate movement of 
96 total loads reported (64 loads of choice cuts, 16 loads of select cuts, no 
loads of trimmings, 16 loads of ground beef). 


   Light gains are holding across the feeder cattle market at midday despite 
the aggressive underlying support seen in live cattle markets. This support 
from live cattle trade has pushed prices back to the positive level for the 
day, but with overall lack of strong longer-term buyer support and uncertainty 
as to how the end-of-week release of the cattle on feed report will affect 
placements, most traders remain cautious. Front-month March futures are holding 
a 22 cent gain, with the full range of the market seen from 20 to 50 cents per 
cwt higher through the morning.    


   Lean hog futures are holding sharp triple-digit losses as sellers quickly 
moved into both nearby and deferred contract months. Front month April futures 
are holding the most aggressive pressure, with losses seen at $2.17 per cwt 
through late morning. All contracts through February 2018 are now holding 
triple digit losses with traders not only concerned about further liquidation 
through the futures trade, but also recent weakness seen in cash and wholesale 
pork values. Cash prices are lower on the National Direct morning cash hog 
report. The weighted average price fell $1.11 at $71.63 per cwt with the range 
from $66.00 to $74.00 on 3,919 head reported sold. Cash prices are lower on the 
Iowa Minnesota Direct morning cash hog report. The weighted average price fell 
$0.64 at $72.91 per cwt with the range from $66.00 to $74.00 on 1,079 head 
reported sold. The National Pork Plant Report reported 225 loads selling with 
prices down $1.48 per cwt. Lean hog index for 2/20 is at $77.24 up $0.17 with a 
projected two-day index of $77.64 up $0.40. 

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


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