DTN Midday Livestock Comments          12/05 11:50

   Cattle Markets Stabilize Midday Tuesday

   Higher prices were a long overdue welcome in cattle trade Tuesday morning, 
although the upward shift in prices is doing very little in regaining strong 
market support that many had hoped for during early December. Hog futures have 
retracted early week gains, but limited volume is keeping prices contained.

Rick Kment
DTN Analyst

GENERAL COMMENTS:

   Strong early gains in feeder cattle futures has helped reduce the sting of 
the sharp losses seen over the past three trading sessions. The underlying 
movement of the market in the last several days has left the cattle complex 
unsupported, but still fundamentally oversold, allowing for the current 
volatility in the market.

   After trading at the lowest price levels since last spring in nearby 
contracts, prices feeder cattle prices have moved above last week's support 
levels. The ability to sustain buyer support through the rest of the week will 
be very important in helping to break the negative market cycle which has 
pushed prices sharply lower in the last three months.

   Live cattle futures remain higher, but the overall lack of support in beef 
and cash cattle values may make it hard to stimulate active support in the near 
term. Lean hog futures remain moderately lower with traders erasing early week 
gains in most contract months. March corn is up 2 at $4.875 and January soybean 
meal is up $4.60 at $412.9. The Dow Jones Industrial Average is down 108.63 at 
36,095.81.

LIVE CATTLE:

   Live cattle trade has sustained early positivity through the morning 
Tuesday, although limited overall buyer support has been able or willing to 
trickle into the complex at this point. Following the volatile up and down 
shifts across the complex over the past few weeks, traders seem to need more 
than a one-day price bounce before any significant underlying support develops 
across the market.

   February live cattle futures are leading the market higher with a 75 cent 
per cwt gain, but this is still leaving markets near long-term support levels 
in nearby contracts and very vulnerable to additional selling pressure through 
the end of the week. The holiday season is quickly approaching, which may also 
limit additional market support before the end of the year.

   Cash cattle markets are silent with asking prices and bids unavailable at 
this point. It is expected that trade will be delayed until midweek or later, 
with the potential for a late week movement in cash cattle activity this week. 
December live cattle are $0.88 higher at $168.125, February live cattle are 
$0.80 higher at $167.875, April live cattle are $0.65 higher at $170.35. Boxed 
beef prices are lower: choice down $0.91 ($294.08) and select down $4.19 
($258.64) with a movement of 87.81 loads (43.66 loads of choice, 24.00 loads of 
select, 10.28 loads of trim and 9.87 loads of ground beef).

FEEDER CATTLE:

   Strong, triple-digit gains have aggressively moved into the feeder cattle 
futures with spot January contracts holding gains above $4 per cwt at midday. 
This is a welcome relief to the sharp losses seen over the past few days, but 
just to move prices away from long-term support levels and multi-month lows is 
still not able to create the needed confidence to spark further active buying 
across the entire complex.

   Traders are looking for the potential to bring additional buyer support back 
into the market through the rest of the week, potentially distancing market 
prices from current levels, and hopefully building technical support across the 
entire complex.

   January feeders are $3.70 higher at $214.225, March feeders are $3.60 higher 
at $217.175 and April feeders are $3.65 higher at $221.075.

LEAN HOGS:

   Lean hog futures have backed away from early week gains with moderate to 
firm price pressure seen at midday. Nerby contracts are holding losses of $1 
per cwt, while trades continue to focus on the recent softness in pork values 
and erosion of cash hog values. December contracts remain under pressure, but 
extremely lightly traded, with most focus on February futures. The ability to 
keep February contracts at or near the $70 per cwt price level seems to be the 
key to technical support through nearby lean hog futures contracts. Limited 
volume is expected to be seen in the near future, which may limit additional 
market movement not only the rest of Tuesday, but through much of the week.

   December lean hogs are $1.05 lower at $67., February lean hogs are $1.18 
lower at $69.625 and April lean hogs are $1.30 lower at $76.25.

   Hog Prices are lower on the Daily Direct Morning Hog report, down $2.26 with 
a weighted average of $53.96, ranging from $48.00 to $57.00 on 4,398 head with 
a five-day rolling average of $57.16. Pork Cutouts totaled 213.54 loads with 
189.91 loads of pork cuts and 23.63 loads of trim. Pork cutout values are up 
$1.38 at $84.23.

   Rick Kment can be reached at kmentrick@gmail.com

   **

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