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DTN Midday Livestock Comments          09/22 11:37

   Cattle Rally Holds Midday Wednesday

   Buyers have moved into cattle futures Wednesday morning following a market 
rebound in most outside markets. The Dow Jones Index is regaining lost ground 
from earlier in the week, helping to create stability and optimism in most 
commodity trade, including livestock futures.

By Rick Kment, Contributing Analyst


   Firm outside market gains Wednesday morning has helped to rekindle buyer 
support in most livestock trade. Cattle futures are leading the livestock 
market higher with active support seen in all futures contracts. Although it is 
still too early to declare a change in direction following early week pressure, 
the potential that enough liquidation has taken place over the last couple of 
weeks could help to extend current gains through the upcoming sessions. Hog 
futures seem to have stabilized, but are still unable to show significant 
market strength, leaving most contracts steady to lower at midday. December 
corn is up 5 cents per bushel and December soybean meal is up $0.80 per ton. 
The Dow Jones Industrial Average is up 442 points with Nasdaq adding 154 points.


   Moderate to active price gains have developed in live cattle trade Wednesday 
morning as spot October futures are holding 52-cent gains at midday, while 
slightly more aggressive interest is holding in early 2022 contract months. 
With most commodity and stock markets moving higher during morning trade, the 
focus on widespread market shifts is taking priority over fundamental cattle 
and beef market moves. In a wider scope, traders seem to be moving past China 
property development issues for the time being and now turning the focus to the 
afternoon federal reserve meeting. Potential longer-term shifts in financial 
support of the economy is the main interest ahead of the meeting briefing. The 
ability to hang onto early gains in nearby live cattle futures could help spark 
more active gains through the end of the week. Cattle traders are also starting 
to focus on Friday's cattle on feed report. Pre-report estimates are pointing 
to total on feed numbers at 98.1% year ago levels. This estimate would put 
total on feed numbers at 11.17 million head on Sept. 1. Typically cattle on 
feed levels post yearly lows in September. With the current estimate indicating 
that seasonal lows may have already been seen in the August report. Cash cattle 
trade has taken an unusual turn Wednesday morning with light trade seen in 
several areas right away Wednesday. Although trade remains light, the ability 
to spark interest this early has gained the attention of feeders. Live cash 
cattle trade in the South is seen at $123 to $124 per cwt, mostly $124 per cwt. 
This is generally steady with last week's average and could set up further 
trade at current price ranges. Northern dressed trade in Nebraska is reported 
at $198 per cwt, $1 per cwt lower than last week's average. More cattle are 
expected to still be traded over the next couple of days. Reported delivery 
schedules for cattle sold Wednesday morning are in the first two weeks of 
October, indicating that packers continue to be well positioned for immediate 
needs. The Fed Cattle Exchange Auction today listed a total of 3,941 head, of 
which 444 actually sold, 628 were scratched from the auction and 2,869 head 
were listed as unsold, as they did not meet the reserve prices that ranged from 
$122 to $124.50. Opening prices ranged from $118 to $122, high bids ranged from 
$124 to $124.25. The state-by-state breakdown looks like this: Texas: 2,958 
total head, with 444 head sold at $124 to $124.25, 1,886 head went unsold and 
624 were scratched from the auction, note of these 624 head that were 
scratched, 273 head were sold at $124 before the Fed Cattle Exchange Auction 
started. Kansas: 533 total head, all of which went unsold; Nebraska: 450 total 
head, all of which went unsold. Tuesday morning's boxed beef prices are lower 
in moderate trade, with choice cuts $2.42 lower at $308.95 and selects down 
$0.41 at $277.60 on a total count of 94 loads. Dow Jones estimated Wednesday's 
cattle slaughter at 120,000, steady with a week ago, and 1,000 less than year 
ago levels.


   Early support in all cattle futures helped spark light to moderate support 
across feeder cattle trade. Spot September contracts have dipped lower late 
Wednesday morning as traders have moved the focus of nearby contracts to the 
morning rally in grain trade. Higher corn and soybean costs point to increased 
production costs. Given the volatility in the market, these moves have a larger 
impact on nearby contracts rather than deferred futures. Summer 2022 contracts 
are holding firm gains with April and May contracts posting $1 gains at midday. 
The ability to sustain morning support through the end of the session could 
help to spark follow-through interest in all contract months. The CME Feeder 
Cattle Index was priced at $153.77 for Sept. 20.


   Widespread outside market support developing in most other commodity 
markets, and stock markets seem to have only limited interest in lean hog trade 
with prices mixed within a narrow trading range midmorning. Hog futures have 
continued to bounce higher and lower through the morning with traders unable to 
find significant buyer support in order to break away from the market slide 
seen early in the week. October futures are leading the complex lower with a 
27-cent per cwt loss. Although losses are small compared to pressure seen over 
the last two days, the inability to instill buyer support through the complex 
continues to focus on concerns of further losses in the near future. February 
through May contracts are holding narrow gains, limiting further bearishness 
from sweeping through the complex. Cutouts are up $3.93 at $106.69 Wednesday 
morning on 186.85 loads. Negotiated hog prices are unreported at this time due 
to confidentiality. Dow Jones estimated Wednesday's hog slaughter at 477,000, 
steady with a week ago, while 8,000 less than year ago levels. The CME Lean Hog 
Index is estimated at $92.65 for Sept. 21.

   Rick Kment can be reached

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