DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $230.61 +0.80*

Hogs: Lower Futures: Mixed Lean Equiv: $110.11 -2.52**

* based on formula estimating live cattle equivalent of gross packer revenue.

(The Live Cattle Equiv. Index has been updated to depict recent changes in live cattle weights and grading percentages.)

** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

The cattle complex rejected early losses to close mixed in live cattle and slightly higher in feeder cattle futures. The early pressure from outside markets was unable to keep the market down as traders began to focus on current price levels and market potential. Futures moved near the recent lows only to uncover technical buying interest at those levels. Feeder cattle may be developing a sideways trading range while live cattle still have not developed a solid trend. Even though boxed beef prices finally showed some gains, traders are cautious whether stability has been found. Choice cuts increased $1.19 with select cuts up $1.00 on Monday. This was not a strong rebound, but a rebound nevertheless. Cash cattle did not trade Monday as business does not seem as urgent as thought after limited trade last week. The Commitment of Traders report showed funds as net sellers of 21,550 contracts bringing their net long positions to 46,043.

Hogs could not find any support Monday even though there was an attempt made to move back near steady prices at one point during the day. The positive aspect was that significant loses were trimmed as futures bounced from support. Pressure from lower cash and lower cutouts was too much to move futures higher. Price on the National Direct Afternoon report was down $2.16 with cutouts down $2.52 at the end of the day. This was not a good combination for the market. China's imports of pork have remained above last year, but recently have been decreasing. The positive aspect is that Mexico's imports of pork have increased significantly, offsetting the decrease that has been seen from China, keeping overall exports running near the record levels of last year. The Commitment of Traders report showed funds as net sellers of 12.075 contracts, bringing their net-long positions to 63,921.

	BULL SIDE		BEAR SIDE
1)	Cattle futures were able to hold despite the pressure seen in other markets. Now that the stock market is rebounding, traders may be more aggressive in buying futures.	1)	Packers may not be too interested in raising bids this week due to cattle futures not showing much strength and demand still uncertain.
2)	Recent support held from which futures rebounded. Higher cutouts may indicate a low may have been reached.	2)	The strength of boxed beef Monday may be short-lived as demand remains in question.
3)	Hogs tested support Monday and rebounded. A more positive financial and commodity outlook may have traders buying the break.	3)	Hog futures tested support Monday and rebounded, but futures still closed with significant losses.
4)	Overall strong pork exports should keep supplies from backing up in the domestic market.	4)	Lower cash and cutouts are not a good combination to provide any market strength.

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For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CDT. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.

Robin Schmahl can be reached at rschmahl@agdairy.com

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