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DTN Midday Livestock Comments          03/25 12:06

   Uniform Price Pressure Seen Monday

   Increased volume Monday morning sparked moderate to strong losses in all 
livestock trade. This lack of early-week buyer support is causing traders to 
quickly adjust positions following strong gains late last week.

By Rick Kment
DTN Analyst

General Comments

   Firm losses continue to hold through the entire livestock complex. Despite 
moderate early gains in lean hog trade, the inability to bring consistent buyer 
interest back into the market has allowed prices to soften through morning 
trade. Cattle trader remains under pressure based on increased cattle placement 
levels last month, creating underlying supply concerns. Corn futures are higher 
in sluggish trade. May corn futures are 1 1/2 cent higher. Stock markets are 
lower in light trade. Dow Jones is 50 points lower with Nasdaq down 24 points. 


   Triple-digit losses have moved through nearby live cattle trade Monday 
morning as traders assess feedlot growth through the month of February and how 
this will affect short- and long-term supplies. The inability to show 
consistent support in boxed beef values through the last week is causing some 
uncertainty through the entire market. April live cattle futures are leading 
the complex lower with a $1.35 per cwt. Even though moderate losses are likely 
to hold through the near term, prices are expected to continue to hover within 
the sideways $3 per cwt trading range seen over the last month. The inability 
to push prices above $130 per cwt at the end of last week continues to cap 
price levels at this point. Cash cattle activity remains sluggish with 
inventory taking and show list distribution likely to spark additional interest 
through the rest of the week. At this point, bids and asking prices are not 
expected to be seen until midweek with trade likely to be pushed off to the 
last half of the week. Boxed Beef cut-outs at midday are mixed, $0.69 higher 
(select) and down $0.27 per cwt (choice) with light movement of 32 total loads 
reported (18 loads of choice cuts, 9 loads of select cuts, no loads of 
trimmings, 6 loads of ground beef).


   Light to moderate losses have moved through cattle futures with April 
thorough November contracts holding uniform losses of 60 to 70 cents per cwt. 
The early-morning pressure based on increased February cattle placements posted 
triple-digit losses. But the inability for traders to contain the same level of 
bearishness through the morning is allowing buyers to slowly trickle back into 
the market based on expectations of firming demand through the upcoming weeks 
and months.


   Early-market support has slowly eroded through the morning Monday with April 
contracts the only futures contract holding gains at midday, with a 20-cent 
gain holding midday. The remainder of the complex has started to back away from 
previous gains despite early-morning support. Deferred contracts have been hit 
the hardest, with losses of $1 to $2.25 per cwt seen in late 2019 and early 
2020 contracts. The emotional support that has driven the market aggressively 
higher, is starting to fade, allowing traders to assess realistic fundamental 
moves over the near future. Cash prices are lower on the National Direct 
morning cash hog report. The weighted average price fell $0.04 at $66.23 per 
cwt with the range from $60.00 to $69.00, on 3,935 head reported sold. Cash 
prices are unreported due to confidentiality on the Iowa/Minnesota Direct 
morning cash hog report. Pork values have posted continued support with firm 
early week primal gains leading to additional support through the entire 
market. Pork cutouts gained $1.21 per cwt at $79.00 per cwt with 121 loads 
traded. Lean hog index for 3/21 is $62.41, up $1.66, with a projected two-day 
index is $64.97, up $2.56.

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


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