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DTN Midday Livestock Comments          12/07 12:07

   Hog Futures Experiencing Another Day of Steep Losses

   Live cattle, feeder cattle and lean hog futures are all trading lower at 
midday Tuesday.

Elaine Kub
Contributing Analyst


   The stock market gapped higher Tuesday, showing renewed economic optimism 
that is carrying over into wheat prices, but not many more of the agriculture 
markets; hogs, pork, and cattle futures are trading lower at midday. The nearby 
live cattle and feeder cattle charts generally remain within $1 of their recent 
highs, so the light losses amid low volume Tuesday morning shouldn't be too 
concerning. Heavier trading interest is noticeable in the hog market, where 
trend followers continue to drive prices lower. March corn is down 1 cent per 
bushel and January soybean meal is down $3.70. The Dow Jones Industrial Average 
is up 518 points and NASDAQ is up 476 points.


   Futures trading volume has been scarce so far for live cattle futures up to 
midday Tuesday, leaving the December chart floating near its contract high from 
last Monday and the deferred contracts only halfheartedly lower in sympathy 
with the hog market's losses. December live cattle are down $0.05 at $138.125, 
February live cattle are down $0.65 at $139.00 and April live cattle are down 
$0.55 at $142.325. The cash market has yet to disclose asking prices this week, 
but the size of Monday's showlists was larger than in recent weeks and, 
alongside softer boxed beef prices, that may cause some apprehension about less 
aggressive packer bids when trade eventually shakes loose later in the week. 
Boxed beef prices are lower: choice down $2.93 ($269.60) and select down $0.89 
($256.96) with a movement of 73 loads (40.71 loads of choice, 22.95 loads of 
select, 4.48 loads of trim and 4.66 loads of ground beef).


   Feeder cattle are still desirable assets when corn prices are stable or 
falling and feeding margins are penciling out positively, so these are the 
livestock futures contracts that have been most willing to test small gains off 
and on through Tuesday morning's trade. January feeders are down $0.425 at 
$164.825, March feeders are down $0.30 at $167.65 and April feeders are down 
$0.475 at $170.25. Ultimately this week, the sentiment at the sale barns will 
depend on how resilient the cash market for fed cattle remains and what 
financial rewards those prices suggest to feeder cattle buyers. The futures 
charts may be in a precarious position for the next couple of days, but no 
massive fundamental shift is currently expected.


   There has been active trade for lean hog futures Tuesday, even out into the 
summer contracts, mirroring the trading enthusiasm noted for stocks, crude oil 
and various other outside markets, but in an opposite direction. December lean 
hogs are down $0.35 at $71.70, February lean hogs are down $1.65 at $76.575 and 
April lean hogs are down $1.65 at $82.00. Nervousness about the new COVID 
variant affecting global economic activity seems to have calmed down; in fact, 
Tuesday brought an announcement from the U.S. Commerce Department showing 
record-high October exports that dramatically narrowed the trade deficit. 
Exports have historically been a supportive factor for pork and lean hog 
prices, too, but not in recent weeks and not right now, demonstrated by those 
triple-digit losses on the futures board.

   The morning's USDA hog report and pork report were delayed Tuesday due to 
packer submission problems. However, daily hog slaughter is projected at 
472,000, and for reference from Monday, the projected CME Lean Hog Index for 
12/3/2021 was at $70.78, hog prices were at a five-day rolling average of 
$56.44, and pork cutout values were at $89.30.

   Elaine Kub is the author of "Mastering the Grain Markets: How Profits Are 
Really Made" and can be reached at [email protected] or on 
Twitter @elainekub.

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