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DTN Midday Livestock Comments          09/20 11:48

   Sharp Stock Market Losses Pressure Livestock Trade

   Aggressive triple-digit losses in stock markets Monday morning has impacted 
all commodity markets. Firm losses are seen in cattle and hog futures with 
concerns that additional non-commercial pressure may develop in the near 
future. Limited volume is likely through the rest of the session, likely 
keeping prices within current market ranges.

By Rick Kment, Contributing Analyst

   GENERAL COMMENTS:

   Early pressure in stock prices have had a significant impact in all 
commodity and livestock markets Monday morning. Traders' concern surrounding 
the financial troubles of developer China Evergrande Group is not only focusing 
on the specific company, but the overall outlook of the China property market. 
Although the panic selling may not last long, the fear in both financial and 
commodity markets is that this may just be the tip of the iceberg when it comes 
to the direction of property values and economic direction in China. For now, 
most livestock traders are taking limited protection, but still unwilling to 
aggressively step in front of the bearish outside market news, allowing for 
moderate losses in cattle and hog futures Monday morning. December corn is down 
5 3/4 cents per bushel and December soybean meal is down $1.70 per ton. The Dow 
Jones Industrial Average is down 636 points with Nasdaq falling 373 points.

   LIVE CATTLE

   Trade activity in live cattle futures has very little to do with market 
fundamentals Monday morning. Traders' attention is squarely placed on the 
triple-digit losses in the Dow Jones Index and Nasdaq, focusing on concerns of 
more significant price pullback in the upcoming days. Live cattle futures are 
holding losses of 5 to 55 cents per cwt at midday, with October futures leading 
the complex lower. Even though prices have not shown overly aggressive price 
pressure during the morning compared to other commodity markets, the potential 
to keep prices under pressure through the entire Monday session is very likely. 
Traders will continue to balance fundamental and technical market direction 
over the next couple of days, looking for a buy opportunity within the complex. 
Cash cattle markets are typical for a Monday morning with packers and feeders 
still taking inventory and distributing showlists for the week. Following 
steady to weak trade last week, it is likely that most activity will be delayed 
until midweek or later. Bids and asking prices are not expected to be seen 
until Tuesday or Wednesday, although the general softness in futures trade is 
not expected to be helping the outlook for significantly higher cash cattle 
trade in the near future. Showlists seen late Monday morning appear to be 
mixed, lower in Texas, Nebraska and Colorado, while higher in Kansas. Friday 
morning's boxed beef prices are higher in light trade, with choice cuts $1.2 
higher at $315.67 and selects up $0.56 at $280.31 on a total count of 43 loads. 
Dow Jones estimated Monday's cattle slaughter at 120,000, 7,000 higher than a 
week ago and 3,000 more than year ago levels.

   FEEDER CATTLE

   Feeder cattle futures have become the most stable of all livestock trade 
Monday morning with midday market moves holding from 42 cents lower to 7 cents 
higher. All but November contracts are trading in the red through morning 
activity, but unlike the rest of the livestock market, the firm pullback in 
grain trade is helped to limit market pressure due to lower cost of feed 
associated with lower corn and soybean prices. Very limited activity is likely 
to be seen through the rest of the session with traders' attention on outside 
markets. The CME Feeder Cattle Index was priced at $154.60 for Sept. 16.

   LEAN HOGS

   Firm pressure has been seen in all lean hog trade Monday morning as traders 
have pulled back from last week's gains. Given that the widespread pressure in 
outside markets has little to do with pork market fundamentals, price losses 
are moderate at best compared to many of the financial markets. October futures 
are holding a 37-cent loss, still trading above $85 per cwt, which may put 
traders in a very good position to step back into the market. Pork cutout 
prices surged higher following aggressive double-digit gains in ham cuts. Ham 
prices increased $19.79 per cwt on the morning report with most other cuts 
posting firm gains. Cutouts are up $2.06 at $107.47 Monday morning on 131.49 
loads. Negotiated hog prices are $2.67 lower per cwt with a weighted average 
price of $78.90 per cwt on 3,169 head on the National Direct Morning Hog 
Report. The swine/pork market formula price is listed at $92.44 per cwt. Dow 
Jones estimated Monday's hog slaughter at 475,000, 8,000 more than week ago, 
while 3,000 less than year ago levels. The CME Lean Hog Index is estimated at 
$94.26 for Sept. 16.

   Rick Kment can be reached kmentrick@gmail.com




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