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DTN Midday Livestock Comments          02/19 11:44

   Hog Prices Weaken

   Widespread pressure swept through hog futures Tuesday morning as traders 
pushed all nearby contracts to limit lows.

By Rick Kment
DTN Analyst

General Comments

   Early selling in April lean hog futures gained momentum Tuesday with prices 
breaking through long-term support levels and setting contract lows. All nearby 
contracts traded $3 per cwt lower midday Tuesday. Cattle markets have shifted 
higher with traders looking for refuge from the hemorrhaging hog complex. March 
corn futures are 3 1/4 cents lower. Stock markets are higher in light trade. 
Dow Jones is 35 points higher with Nasdaq up 26 points. 


   Aggressive gains flooded back into live cattle trade as traders who were 
fleeing the hog complex looked for refuge. This allowed for additional market 
support to move into all nearby trade, pushing April futures to new contract 
highs through the morning. April futures are holding a $1.82-per-cwt rally, at 
$129 per cwt, with firm support developing in all futures. Cash markets remain 
undeveloped early in the week with showlists steady to lighter this week in 
most areas. This could allow for increased firmness from feedlot managers when 
asking prices are seen later in the week. Bids and asking prices are 
unavailable and will likely be unavailable until midweek or later. The futures 
market volatility may add increased cash market shifts as the week continues. 
Boxed beef cut-outs at midday are higher, up $1.74 (select) and up $0.87 per 
cwt (choice) with light movement of 54 total loads reported (38 loads of choice 
cuts, 8 loads of select cuts, 3 loads of trimmings, 5 loads of ground beef).


   Buyers quickly moved back into cattle trade Tuesday morning following the 
sharp pressure in hog contracts and lackluster interest in most outside 
markets. This led to triple-digit gains in feeder cattle futures, replacing 
late-week losses on Friday. Traders continue to look for longer-term market 
direction, which is adding some increased volatility in the complex. March 
futures are leading the complex higher with a $1.75 per cwt gain, based on 
support in live cattle trade.


   Fueled by continued weak market fundamentals, initial selling stepped back 
into the complex. Within the first few minutes of trade, this broke through 
long-term support and contract lows in April futures, establishing a bearish 
market reversal in the complex. The weaker momentum has been too much to 
overcome in all nearby contracts with all contracts through August holding 
limit losses of $3 per cwt. It appears that the pressure is enough to hold 
prices at these lows through closing bell, which would allow expanded trading 
limits Wednesday. Cash prices are higher on the National Direct morning cash 
hog report. The weighted average price is up $0.04 at $48.29 per cwt with the 
range from $44.50 to $49.00 on 7,419 head reported sold. Cash prices lower on 
the Iowa/Minnesota Direct morning cash hog report. The weighted average price 
is down $0.27 at $48.38 per cwt with the range from $44.50 to $49.00 on 4,109 
head reported sold. Pork carcass values slipped Tuesday following weakness in 
loin and belly cuts with prices falling $0.56 per cwt at $61.02 per cwt with 
230 loads traded. Lean hog index for 2/15 is $54.74, down $0.28, with a 
projected two-day index is $54.43, down $0.31.

   Rick Kment can be reached at rick.kment@dtn.com 


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