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DTN Midday Livestock Comments          06/26 11:31

   Support Floods Cattle Complex Wednesday 

   Limit gains have swept through feeder cattle trade Wednesday morning as 
active support moved into all cattle futures. This move could stimulate active 
end-of-week support, reviving additional price gains during early July.

By Rick Kment
DTN Analyst

General Comments

   Buyers quickly moved back into the cattle complex with feeder cattle trade 
leading the surge higher. August futures are locked in limit gains of $4.50 per 
cwt, helping to stimulate support through the rest of the cattle complex. Hog 
markets are mixed in a narrow range as traders try to sort out longer-term 
direction later in the week. Corn futures are lower in light trade. July corn 
futures are 2 1/4 cents lower. Stock markets are higher in light trade. Dow 
Jones is 41 points higher with NASDAQ up 45 points. 

   LIVE CATTLE:

   Limited initial gains at opening bell have quickly expanded following 
aggressive buyer interest moving into feeder cattle trade. This has allowed for 
triple-digit gains in all live cattle trade with August futures leading the 
surge higher, on a $2.12-per-cwt rally. This underlying support in the complex 
is taking advantage of the severely oversold market status, which until now, 
limited a critical mass of buyers willing to step into the complex. The move 
not only pushed prices off contract lows, but sparked a technical reversal in 
the complex, allowing for potential upside movement through the end of the 
month. Although overall beef market fundamentals remain shaky through early 
summer, the focus on sparking long-term support is likely to bring about 
renewed interest over the next couple of weeks. Cash cattle interest remains 
sluggish with a few bids redeveloping Wednesday morning in the same range as 
Tuesday. Bids are seen at $107 live and $174 to $175 dressed. Given the wide 
gap between bids and asking prices, and strong futures support, it is unlikely 
that packers will gain any interest at these levels. Asking prices are holding 
at $110 and higher live and $$180 to $182 dressed. Although some trade may 
develop by the end of the day, most activity is likely to be pushed into 
Thursday or Friday. Boxed Beef cut-outs at midday are higher, $0.21 higher 
(select) and up $0.59 per cwt (choice) with moderate movement of 86 total loads 
reported (36 loads of choice cuts, 18 loads of select cuts, 4 loads of 
trimmings, 27 loads of ground beef).

   FEEDER CATTLE:

   Buying interest quickly developed Wednesday morning as traders focus on a 
technical reversal seen in cattle markets with prices bouncing off contract 
lows following recent market pressure. Although the light pressure in corn 
trade is limiting production concerns, traders are focused on the intensely 
oversold cattle complex, and potential for unrestricted buying that may develop 
over the near future. August futures have spent much of the morning limit 
higher with $4.50 per cwt gains, while other nearby contracts are holding gains 
above $4 per cwt.

   LEAN HOGS: 

   Limited activity is seen in hog trade Wednesday morning with trade interest 
quickly shifting to aggressive gains in cattle markets. Lean hog futures remain 
mixed in a narrow to moderate trading range, although most contracts are able 
to etch out firmer price levels midday Wednesday. Lightly traded July futures 
remain under limited pressure, falling 40 cents per cwt, while all other nearby 
contracts are hanging onto 10 to 50 cent gains, although volume remains 
sluggish across the complex. If current gains hold, this will go a long way in 
stimulating additional but more stable buyer support late in the week as 
traders focus on bouncing off of long term lows set Monday. Cash prices are 
lower on the National Direct morning cash hog report. The weighted average 
price is down $1.76 at $70.31 per cwt with the range from $62 to $71.50 on 
3,736 head reported sold. Cash prices are unreported due to confidentiality on 
the Iowa/Minnesota Direct morning cash hog report. Pork values continue to show 
weakness following a $10.26 per cwt loss in rib prices. Pork cutouts fell $0.95 
per cwt at $74.63 per cwt with 143 loads traded. Lean hog index for 6/24 is 
$78.31, down 0.34, with a projected two-day index is $77.91, down 0.40.

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


(BAS)

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