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DTN Midday Livestock Comments          09/24 11:55

   Livestock Trade Mixed, Quiet Friday

   Livestock futures are mixed Friday morning with narrow to moderate trading 
ranges as traders adjust to previous market swings from the week. A 
report-heavy afternoon is in store for all livestock markets with Cattle on 
Feed and Hogs and Pigs reports released at 2 p.m. CDT.

By Rick Kment, Contributing Analyst


   Morning activity has been generally quiet in livestock futures Friday, as 
traders focus on balancing previous market shifts with afternoon report 
expectations. This is the last chance for traders in cattle and hog markets to 
adjust to expectations ahead of the Cattle on Feed and Hogs and Pigs reports, 
both released after closing bell Friday afternoon. Early expectations are not 
pointing to any major changes from year ago levels, which has allowed markets 
to remain generally quiet Friday morning. December corn is down 3 3/4 cents per 
bushel and December soybean meal is down $2.00 per ton. The Dow Jones 
Industrial Average is up 3 points with Nasdaq down 32 points.


   Moderate pressure in live cattle futures is seen Friday morning as traders 
adjust positions ahead of the weekend and upcoming Cattle on Feed report. 
Pre-report estimates point to a 1.9% drop in on-feed numbers from year ago 
levels. This estimate would account for 11.17 million head of cattle in feed 
yards (1,000 head or greater size) at the first of September. A total in this 
area would mean increased on-feed numbers from Aug. 1 and indicate the seasonal 
low has already been set. This could help focus market attention on breaking 
away from counter-seasonal market shifts seen during 2020 due to the COVID 
pandemic. The outlook for long-term supply tightness continues, but without a 
significantly lower on-feed number Friday afternoon, price levels are not 
likely to remain extremely bullish following the report. Cash cattle activity 
remains extremely quiet Friday morning with the bulk of business done 
Wednesday. There still may be some late-week clean-up trade, especially in the 
North during the day Friday. But unless significant changes are seen in the 
market in the next couple hours, the tone of the market appears to have already 
been set. Trade in the North on a dressed basis developed from $193 to $198 per 
cwt with most trade seen at $198 per cwt. This is generally $1 per cwt lower 
than last week's weighted average. Live trade in the South developed at $123 to 
$124 per cwt, which is steady with last week. Asking prices on cattle still 
left on showlists remain at $198 in the North and $124 live basis in the South. 
Friday morning's boxed beef prices are mixed in light trade, with choice cuts 
$1.31 lower at $304.29 and selects up $1.36 at $276.35 on a total count of 63 
loads. Dow Jones estimated Friday's cattle slaughter at 116,000 -- 3,000 less 
than a week ago and 4,000 more than year ago levels.


   Narrow losses have trickled into feeder cattle trade with the general tone 
extremely subdued in front of the Cattle on Feed report. Light to moderate 
pressure in corn and grain markets is limiting downside market shifts in feeder 
cattle compared to live cattle, although the move in outside markets is not 
enough to stimulate widespread buying at this point. Trade is likely to hover 
within a narrow range through the rest of the session, although the limited 
volume could still bring an outside chance of last-minute market swings just 
before closing bell. The focus on this afternoon's Cattle on Feed report 
continues to keep traders interested, although at this point most traders have 
already adjusted positions according to where they feel the report will lead 
the market in the near future. Trader estimates point to a 1% drop in 
placements during August compared to 2020. This estimate has the widest range 
of all Cattle on Feed categories, which could bring additional volatility to 
the market and less confidence in where report numbers will land. The CME 
Feeder Index was priced at $154.49 for Sept. 22.


   Lean hog futures have quickly settled down following Thursday's aggressive 
triple-digit rally. Morning trade has held a sideways pattern with prices mixed 
in a narrow range from 20 cents lower to 25 cents higher at midday. The lack of 
significant shifts in the market is due to focus on limited trade direction in 
most commodities at the end of the week following what has been a very volatile 
week, driven by turbulent moves in the stock market. Traders continue to focus 
on the upcoming Hogs and Pigs report, which will be released at 2 p.m. CDT. The 
expectation overall hog numbers will see a 2% reduction from year-ago levels. A 
move in this range should not be a significant market mover as traders continue 
to focus on slightly lower hog herd sizes until the middle of 2022. Significant 
shifts in farrowing intentions through the end of the year will likely be an 
indicator of any sizable market adjustments in the near future. Cutouts are up 
$9.57 at $113.86 Friday morning on 258.15 loads. Negotiated hog prices are 
$0.21 higher at $76.93 per cwt on 2,780 head. The swine/pork market formula 
price is listed at $89.58 per cwt. Dow Jones estimated Friday's hog slaughter 
at 472,000 -- 1,000 less than a week ago, while 10,000 more than year ago 
levels. The CME Lean Hog Index is estimated at $91.47 for Sept. 23.

   Rick Kment can be reached

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