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DTN Midday Livestock Comments          10/27 11:38

   Cash Cattle Jolt Higher Midday Wednesday

   The live cattle contracts aren't done rallying yet as the market gains more 
support from higher cash cattle trade.

ShayLe Stewart
DTN Livestock Analyst


   It's been an exhilarating week thus far for the cattle market as cash cattle 
prices have seen a $2.00 to $4.00 jump over last week and the live cattle 
contracts are continuing to grind higher. The lean hog market still hasn't 
found the support that it's been looking and is concerned what may be unveiled 
in Thursday's export report. December corn is up 12 1/2 cents per bushel and 
December soybean meal is up $5.00. The Dow Jones Industrial Average is down 
90.63 points and NASDAQ is up 89.28 points.


   Tuesday's stark advancement on the board was great, but a $2.00 to $4.00 
jump in cash cattle prices is even sweeter. It's been a long, long time since 
the market has reacted this positively to a bullish Cattle on Feed report, but 
what's helping rally the market as well is the fact that packers are short 
bought. The combination of the two factors has heightened the vibrancy 
throughout the live cattle market and sent both futures and cash prices higher. 
December live cattle are up $0.27 at $131.72, February live cattle are up $0.50 
at $136.87 and April live cattle are up $0.27 at $139.37. There's been some 
dressed trade reported in the North at $200 ($4.00 higher than a week ago) and 
a light trade in the South at $126 (steady to $2.00 higher than a week ago). If 
packers continue to run at the speed of processing 122,000 head a day, the 
market could see supportive undertones for quite some time.

   The Fed Cattle Exchange Auction listed a total of 2,692 head, of which 394 
actually sold, 517 were scratched from the auction and 1,781 head were listed 
as unsold, as they did not meet the reserve prices that ranged from $125 to 
$128. Opening prices were $124, high bids ranged from $124 to $125.75. The 
state-by-state breakdown looks like this: Texas 1,530 total head, with 394 head 
sold at $125.50 to $125.75, 871 head went unsold and 265 were scratched from 
the auction; Kansas 840 total head, all of which went unsold; South Dakota 252 
total head, all of which were scratched from the auction. California 70 total 
head, all of which went unsold.

   Boxed beef prices are lower: choice down $1.41 ($283.35) and select down 
$0.44 ($262.10) with a movement of 93 loads (52.87 loads of choice, 20.63 loads 
of select, 3.21 loads of trim and 16.58 loads of ground beef).


   The corn market's $0.09 to $0.10 rally has grabbed the attention of the 
feeder cattle market, but so has the stellar cash cattle trade that's overcome 
the live cattle market. The market is in the middle of a balancing act as 
watching feed costs is crucial, but if the cash cattle market can break out of 
the sideways trap that's shackled all of 2021 -- that's big! November feeders 
are down $0.95 at $158.82, January feeders are down $1.12 at $159.47 and March 
feeders are down $1.05 at $160.65. Cow-calf producers are sending their calves 
to town, and with the market showing promising long-term upside potential in 
the live cattle sector, feeder cattle price will most likely see a bump in the 
countryside as well.


   The lean hog contracts toyed with the idea of trading mildly higher at 
Wednesday's start, but as the day has progressed, the market has continued to 
plunder as technical support has vacated the market. December lean hog are down 
$0.77 at $71.87, February lean hogs are down $0.82 at $74.32 and April lean 
hogs are down $0.75 at $78.37. It's tough to say where the market's bottom will 
be as the biggest question continues go unanswered, "where will the market find 
demand?" Regardless if it was international demand from higher exports or an 
uptick in our domestic supermarket, packers need to find a buyer. With that 
being said, seeing how Thursday's export report treats the hog enthusiasts will 
be pivotal in how the market reacts for the rest of the week.  

   The projected lean hog index for Oct. 26 is down $0.99 at $81.67 and the 
actual index for Oct. 25 is down $0.32 at $82.66. Hog prices are higher on the 
National Direct Morning Hog Report, up $0.15 with a weighted average of $63.81, 
ranging from $62.00 to $66.00 on 7,615 head. Pork cutouts total 201.42 loads 
with 161.69 loads of pork cuts and 39.73 loads of trim. Pork cutouts are 
higher: up $3.36, $97.68.

   ShayLe Stewart can be reached

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