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DTN Midday Livestock Comments          09/16 11:59

   Hog Futures Surge Thursday

   Lean hog futures were the bright spot of livestock trade Thursday morning 
with triple-digit gains in all contract months. Steady to lower moves in live 
and feeder cattle futures have limited market activity and are adding concerns 
of further market softness through the end of the week.

By Rick Kment, Contributing Analyst


   Strong gains in lean hog futures over the last two trading sessions are 
pushing spot October futures nearly $5 per cwt higher. Widespread buyer support 
in all lean hog trade is drawing more interest into the hog complex. Cattle 
markets remain weak at midday with early support in nearby feeder cattle 
futures slowly eroding as the session continues. December corn is down 3 cents 
per bushel and December soybean meal is up $3.10 per ton. The Dow Jones 
Industrial Average is down 128 points.


   Live cattle futures remain moderately lower with October holding a 62-cent 
loss at midday. The general weakness through the entire live cattle complex is 
adding to the price softness seen Wednesday. Concerns of cash and beef price 
weakness are starting to erode earlier week gains in live cattle trade. But as 
of now, it appears market lows which developed Monday may be able to hold 
through the week. This could help create a wide, but well-defined, market range 
which traders are looking for heading into the fourth quarter of the year. Beef 
exports totaled 15,300 metric tons (mt) last week. This is a 3,000 mt 
improvement from the previous week and the highest weekly export sales level 
since the middle of July. Japan and South Korea were the largest purchasers of 
beef last week making up 72% of all beef export sales. Beef shipments posted a 
total of 16,900 mtons shipped, with Japan and South Korea also the leading 
destinations, making up the majority of beef shipments for the week. Cash 
cattle activity remains generally quiet Thursday morning following light to 
moderate trade in most areas Wednesday. Southern live deals are reported at 
$123 to $124 per cwt, generally steady with last week's averages. Trade in the 
North on a dressed basis took place mostly at $200 per cwt, which is $1 per cwt 
lower than last week. Some live trade in the North was reported through the day 
Wednesday at $125 per cwt, but it is still uncertain just how much activity 
took place. It is likely that some additional trade will trickle into the 
market over the next couple of days, but the overall amount of cattle sold 
Wednesday may be enough to set the price trend for the week. Asking prices on 
cattle left on showlists are at $125 in the south and $202 dressed basis across 
the north. Packer bids remain undeveloped at midday but could slowly move back 
onto the table over the next few hours. Thursday morning's boxed beef prices 
are lower in active trade, with choice cuts $1.58 lower at $318.24 and selects 
down $2.09 at $281.80 on a total count of 74 loads. Dow Jones estimated 
Thursday's cattle slaughter at 121,000, steady with a week ago, and 2,000 more 
than year ago levels.


   Feeder cattle contracts continue to be mixed in limited overall trade 
Thursday morning. Nearby September futures have been able to hold onto narrow 
gains through the morning, although the pressure in live cattle trade has 
further eroded the rest of the complex. The ability to hold support which 
developed earlier in the week will continue to be a significant factor in all 
feeder cattle trade. At this point, traders appear to be trying to etch out 
limited positioning opportunities, although prices could see further volatility 
through the end of the week. This may bring more moderate to strong price 
shifts into late 2021 and early 2022 contract months. The CME Feeder Index was 
priced at $154.20 for Sept. 14.


   Triple-digit gains have flooded through the entire lean hog futures complex 
Thursday morning. Strong October gains at midweek helped turn the tide on 
market technicals, as traders are now focusing on early week prices potentially 
setting support levels in the complex. October futures have rallied nearly $5 
per cwt in the last two trading sessions, which caught the attention of 
commercial traders who have been hovering on the sidelines. Noncommercial 
traders are also starting to take notice, especially given the underlying 
bearish turn in several outside markets Thursday morning. Even though these 
moves higher may be enough to rekindle longer term buying back into the lean 
hog complex, a portion of this support is likely to quickly exit once outside 
markets appear to become more stable in the upcoming days. Pork sales in the 
weekly export sales report posted total sales of 25,300 mt with total shipments 
of 25,800 mt. This weekly sales total is a strong pullback from the 33,800 mt 
last week and may start another downward cycle in overall export sales through 
the upcoming weeks. China totaled total purchases of 1,800 mt with shipments to 
the country at 3,700 mt. Concerns are that as pork production continues to 
improve in China, the availability of aggressive export sales could become more 
limited. Mexico led the leader board for the week with 5,800 mt of pork sold, 
with Dominican Republic and Japan rounding out the top three sales 
destinations. Pork cutout prices bounced higher following strong gains in belly 
cuts. Active price shifts developed in several market cuts, leaving the 
potential for additional wide market swings in the afternoon report. Cutouts 
are up $2.47 at $108.17 Thursday morning on 154.74 loads. Negotiated hog prices 
are $1.91 lower per cwt with a weighted average price of $81.61 per cwt on 
3,973 head on the National Direct Morning Hog Report. The swine/pork market 
formula price is listed at $92.72 per cwt. Dow Jones estimated Thursday's hog 
slaughter at 478,000 -- 3,000 less than week ago and 9,000 more than year ago 
levels. The CME Lean Hog Index is estimated at $94.45 for Sept. 15.

   Rick Kment can be reached

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