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DTN Midday Livestock Comments          02/23 11:45

   Lean Hogs Face Some Resistance

   Lean hog contracts were eager Tuesday and were fully higher in the day's 
early hours. But, as time progressed, there's been more push back than 
initially felt in the day's open. 

ShayLe Stewart
DTN Livestock Analyst


   Early Tuesday, lean hog futures were bold and confident about their upward 
progression. But, as the day steps into Tuesday afternoon, more resistance is 
building, and the complex is growing a little more skeptical of its higher 
surge. Cattle futures could be trading mixed, but instead are fully lower with 
traders unsure of the near future. March corn is up 2 1/2 cents per bushel and 
March soybean meal is up $4.40. The Dow Jones Industrial Average is down 130.43 
points and NASDAQ is down 254.33 points.


   Even though we're already seeing an uptick from last week in slaughter 
speeds, the live cattle market is pushed lower as uncertainty takes front and 
center stage. The market loves seeing boxed beef prices higher, but without 
confirmation as to which direction the cash cattle market will move, traders 
are leery of supporting the market as there are still too many unknown 
variables. April live cattle are down $1.77 at $121.30, June live cattle are 
down $1.05 at $119.20 and August live cattle are down $0.90 at $117.52. The 
week's cash cattle market is at an utter standstill without any bids developed 
thus far. Some early asking prices in the South have been noted at $116, but 
the North has yet to place their asking prices. With packers wanting to 
aggressively push this week's slaughter to make up for some of the lost ground 
of last week's processing, there could be some interest in the cash cattle 
market. But it won't come easy nor at the prices desired. For the next couple 
of weeks packers have ample supplies of committed cattle already spoken for, 
which mitigates their need to dive into the cash cattle market headfirst.

   Boxed beef prices are higher: choice up $0.65 ($240.63) and select up $1.10 
($231.08) with a movement of 72 loads (45.64 loads of choice, 12.66 loads of 
select, 6.14 loads of trim and 7.63 loads of ground beef).


   The corn market is only having a modest rally, seeing a 4-cent rally in the 
nearby contracts, but the feeder cattle contracts have waved their white flag 
and are tracking back down to lower prices into Tuesday afternoon. March 
feeders are down $1.10 at $138.22, April feeders are down $1.02 at $142.25 and 
May feeders are down $1.37 at $144.70. After seeing Monday's impressive CME 
Feeder Cattle Index (which jumped $3.01 higher) the futures market may be 
feeling pressured. But the demand through the countryside is roaring into the 
new week. As most sale barns in the Midwest and Southern Plains were closed 
last week, buyers are coming to market aggressively and looking to fill some 
orders after having a dark week.


   The lean hog contracts ran into Tuesday, ready to take on the day. But as 
time has progressed, some minor resistance has crept into the complex. April 
lean hogs are up $0.67 at $85.80, June lean hogs are down $0.07 at $93.00 and 
July lean hogs are down $0.02 at $93.12. Looking at how far the market has come 
in the last month is nothing shy of a praiseworthy rally. But as traders look 
at the charts, some are beginning to wonder how much more upside does the 
market truly have? Once the market sees a dip in the pork cutout value, the 
market could grow bearish and begin to scale lower. 

   The projected CM Lean Hog Index for 2/22/2021 is up $0.42 at $78.16, and the 
actual index for 2/19/2021 is up $0.31 at $77.74. Hog prices on the National 
Direct Morning Hog Report are unavailable due to packer submission problems. 
Pork cutouts total 194.31 loads with 178.93 loads of pork cuts and 15.38 loads 
of trim. Pork cutout values: up $1.97, $94.08.

   ShayLe Stewart can be reached

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