DTN Midday Livestock Comments          10/22 12:01

   Feeder Cattle Losses Headline Livestock Trade Friday 

   Triple-digit losses in feeder cattle futures Friday morning sparked 
questions of underlying support. Traders are still trying to adjust to 
potential shifts in the upcoming Cattle on Feed report with cattle placements a 
major focus. Hog futures are holding light to moderate gains as traders cover 
positions following Thursday's aggressive losses.

By Rick Kment, Contributing Analyst

   GENERAL COMMENTS:

   Cattle futures continue to show increased price pressure with feeder 
contracts leading the market lower Friday morning. The lack of support in all 
cattle futures has added to weakness in live cattle trade. February futures are 
holding a $1 per cwt loss, while other nearby contracts are also trading close 
to these ranges. Limited gains are seen in hog futures as traders focus more on 
covering positions following Thursday's abrupt moves lower rather than any 
significant directional change in prices. December corn is up 3 1/4 cents per 
bushel and December soybean meal is up $1.30 per ton. The Dow Jones Industrial 
Average is down 38 points with Nasdaq down 175 points.

   LIVE CATTLE:

   Live cattle futures trade has eroded through the Friday session. Following 
pressure Thursday, trade started generally weak with limited interest seen in 
all contracts. But the combined pressure in feeder cattle futures and 
follow-through selling pushed nearby contracts nearly $1 per cwt lower at 
midday. Live cattle futures are well above support levels at this point, but 
traders remain very cautious going into the Cattle on Feed report Friday 
afternoon. Because of the significant market reactions following last month's 
report, traders seem to be less confident with early analyst projections of 
on-feed numbers. This could allow for active pressure all session.

   Cash cattle trade remains quiet Friday morning. Deals already done through 
the week were steady with both last week and other days this week at $124 live 
and $196 dressed. The focus on the upcoming Cattle on Feed report could limit 
additional trade before the report is released. But depending on how the report 
turns out, it is very possible both sides could wait until next week. Given the 
generally light trade over the past few days, packers are expected to want more 
cattle heading into the weekend, but it wouldn't be the first time packers end 
the week short-bought. Friday morning's boxed beef prices are higher in light 
trade, with choice cuts $0.98 higher at $281.64 and selects up $0.67 at $263.39 
on a total count of 54 loads. Dow Jones estimated Friday's cattle slaughter at 
118,000 -- steady with a week ago and 2,000 more than year ago levels.

   FEEDER CATTLE:

   Losses have swept through feeder cattle futures Friday morning. Although 
earlier losses in live cattle contracts seemed to be tempered in the feeder 
cattle market Thursday, traders seemed to lose all sense of short-term support 
Friday morning. October futures remain very lightly traded with light to 
moderate losses, but the rest of the complex is holding triple-digit losses 
late morning. Lack of building support in any sector of the cattle market 
through the week and uncertainty in front of the Cattle on Feed report is 
encouraging traders to take even more protection. This is likely to keep prices 
under significant pressure through the end of the session Friday. Analyst 
expectations for this afternoon's cattle placements are at 101.4% year ago 
levels with a range of 98.8% to 103.3%. The potential that there could be some 
significant volatility in these numbers has traders taking protection ahead of 
the report release. The CME Feeder Index was priced at $155.11 for Oct. 20.

   LEAN HOGS:

   Lean hog prices bounced moderately higher following aggressive triple-digit 
losses Thursday. The late-week gains in the hog market are consistent, but 
still are showing no indication of correcting the weak market structure seen 
over the last few days. End-of-week position adjustments are likely the focus 
of the most recent gains with nearby contracts limiting price rallies to 40 to 
50 cents per cwt through the morning. Trade volume is also generally light with 
most of the livestock complex focused on cattle markets and the afternoon 
release of the Cattle on Feed report. Trade early next week will focus on the 
ability to sustain price support in nearby contracts, which could draw 
additional buyers through the end of October. Wholesale pork prices surged 
higher once again with ham cuts posting a $18.73 per cwt rally. Cutouts are up 
$4.10 at $102.38 Friday morning on 286.07 loads. Negotiated hog prices are 
$0.96 lower at $64.23 per cwt on 4,207 head. The swine/pork market formula 
price is listed at $81.77 per cwt. Dow Jones estimated Friday's hog slaughter 
at 475,000 -- 1,000 more than a week ago and 12,000 less than year ago levels. 
The CME Lean Hog Index is listed at $83.70 per cwt for Oct. 21.

   Rick Kment can be reached kmentrick@gmail.com




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