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DTN Midday Livestock Comments          08/05 11:40

   Hog Futures Slide Lower on Pressure in Pork Prices

   Triple-digit losses in pork cutout values at midweek once again spooked lean 
hog traders, which is holding nearby October futures at or near limit losses at 
midday. Cattle futures are under light to moderate pressure following renewed 
buyer support in grain trade and volatility spilling over from the hog complex. 

Rick Kment, DTN Contributing Analyst


   Despite holding relatively steady early in the session, nearby live cattle 
and feeder cattle futures have started to break under the pressure from lean 
hog futures and concerns that additional grain market support will add even 
more production costs to livestock trade over the near future. December corn is 
up 9 cents per bushel and December soybean meal is up $3.60 per ton. The Dow 
Jones Industrial Average is up 190 points.


   October live cattle are trading down $0.52 at $128.45, following a strong 
rally in grain markets, especially corn prices, which added concerns about 
further production costs. Aggressive spillover pressure from the hog market, 
which is holding limit losses at midday, is creating some nervousness through 
the complex as traders look for direction from not only outside markets, but 
hopefully cash prices will continue to gain strength through the end of the 
week. Cash trade started to slowly develop Wednesday with prices generally 
steady to $1 per higher in the South and most trades at $197 to $198 per cwt. 
Northern trade is seen at mostly $121 to $122 per cwt, $1 to $2 per cwt above 
last week's weighted average. Bids are still undeveloped through the morning, 
but more interest is likely to be seen in the next few hours; however, 
additional trade may hold out until sometime Friday. Thursday morning's boxed 
beef prices are higher with choice cuts up $2.68 at $292.02 and selects up 
$1.73 at $272.88 on a total count of 62 loads. Dow Jones estimated Thursday's 
cattle slaughter at 121,000, up from 119,000 a week ago.


   September feeders are trading down $0.52 at $162.30, following the rebound 
in December corn futures. This continues to add increased price levels for 
feeders, offsetting the buyer support which developed across the entire feeder 
cattle market at midweek. Feeder cattle prices continue to trade at the top end 
of the range seen over the last five years. This could continue to spark 
underlying support by feedlot buyers as continued placement tightness is 
expected not only over the upcoming weeks but may continue through much of 
2022. The CME Feeder Index was priced at $155.97 for August 3.


   Lean hog futures tumbled lower Thursday morning as widespread concerns of 
further pressure in pork cutout values led to increased selling volume. October 
and December contracts are holding limit losses of $3 per cwt at midday. August 
futures are trading 80 cents lower, with prices still above $108 per cwt. With 
August contract expiration just over a week away, and contracts cash settled to 
the CME Lean Hog Index, the relationship between August futures and cash prices 
remains closely tied. If December contracts break below $80 per cwt in Friday 
trade, further liquidation is likely as traders may continue to remain 
concerned about short-term stability in the entire complex. Thursday morning's 
weekly export report posted net sales of 38,800 metric tons (mt) reported for 
2021 were up 1% from the previous week and 32% from the prior four-week 
average. Increases primarily for China (18,300 mt, including decreases of 200 
mt, Mexico (9,200 mt, including decreases of 1,100 mt), Japan (3,300 mt, 
including decreases of 500 mt), South Korea (3,100 mt, including decreases of 
300 mt), and Canada (1,600 mt, including decreases of 400 mt), were offset by 
reductions for Nicaragua (200 mt) and Chile (100 mt). Exports of 28,400 mt were 
down 5% from the previous week and 2% from the prior four-week average.  The 
destinations were primarily to Mexico (12,100 mt), China (4,900 mt), Japan 
(4,000 mt), Canada (1,900 mt), and South Korea (1,300 mt). Cutouts are 
unreported Thursday morning due to packer submission problems, creating delays 
in price reporting. Negotiated hog prices are also unreported due to packer 
submission problems on the National Direct Morning Hog Report. Dow Jones 
estimated Thursday's hog slaughter at 472,000, up from 470,000 a week ago. The 
CME Lean Hog Index is estimated at $111.78 for Aug. 3.

   Rick Kment can be reached

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