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DTN Midday Livestock Comments          02/23 11:58

   Strong Live Cattle Gains Redevelop in February Contracts  

   February live cattle futures have posted sharp triple-digit gains Thursday 
morning. The cash market gains Wednesday is bringing additional buyer interest 
in front-month futures. Lean hog futures remain under pressure as traders are 
looking for the potential to bring a sense of stability to the weakened 
complex. 

By Rick Kment
DTN Analyst

GENERAL COMMENTS: 

   Market shifts in both cattle and hog futures continue to create wide ranging 
market shifts through the complex. February live cattle trade remains sharply 
higher following steady buyer support in front month contracts. Triple-digit 
losses have developed in all but one lean hog contract, leaving additional 
pressure to develop through the complex. Corn prices are lower in light trade. 
March corn futures are 4 cents lower. Stock markets are mixed in light trade. 
The Dow Jones is 56 points higher while Nasdaq is down 26 points.

   LIVE CATTLE:

   Sharp gains continue to hold in front-month February futures which has 
pushed contract prices to $122.75 per cwt at midday. February contracts are the 
only contract month to hold a triple-digit rally at this point, with buyer 
support quickly evaporating through the rest of the market. Even though April 
and June contracts are holding firm gains, trade in deferred contracts is mixed 
from 2 cents lower to 25 cents higher, creating longer-term market uncertainty 
in the complex. February futures expire next week, but the volatility in the 
front-month contract continues to spark additional market interest for the time 
being. Cash cattle activity is quiet through the morning and likely done for 
the week in most areas. There is the potential for some clean up trade to 
develop, especially in the North through the end of the week, but prices are 
expected to have already been set, with very little market development expected 
from here on out. With prices $5 to $6 per cwt higher than last week's levels, 
and active trade seen in all areas Wednesday, any movement in market shifts are 
likely to be minimal. Beef cut-outs at midday are higher, $1.73 higher (select) 
and up $1.58 per cwt (choice) with moderate movement of 86 total loads reported 
(52 loads of choice cuts, 7 loads of select cuts, 10 loads of trimmings, 17 
loads of ground beef). 

   FEEDER CATTLE: 

   Feeder cattle futures have been surprisingly unaffected by the aggressive 
market surge in live cattle futures over the last couple of trading sessions. 
Feeder cattle futures remain mixed in a narrow trading range from 10 cents 
lower to 22 cents higher. The overall lack of direction and recent stability in 
the feeder cattle market is focusing more on the lack of market shifts in 
deferred live cattle trade and the ability to bring additional trader volume to 
the complex through the next several months. 

   LEAN HOGS:

   Strong triple-digit losses have redeveloped across the lean hog futures 
complex. The aggressive pressure in the market has been most evident in front 
month April futures with losses seen at $1.40 per cwt. This has pushed prices 
to $66.32 per cwt as traders continue to remain concerned about the underlying 
support in the pork market. All contracts except February futures have posted 
losses over $1 per cwt at midday, which may spark additional liquidation 
through the end of the week. Cash prices are lower on the National Direct 
morning cash hog report. The weighted average price fell $1.25 at $71.14 per 
cwt with the range from $65.00 to $72.00 on 3,793 head reported sold. Cash 
prices are unreported due to confidentiality on the Iowa Minnesota Direct 
morning cash hog report. The National Pork Plant Report reported 166 loads 
selling with prices up $2.19 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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