DTN Early Word Livestock Comments

Cattle: Steady Futures: Lower Live Equiv: $223.34 -1.22*

Hogs: Steady Futures: Higher Lean Equiv: $117.97 +6.46**

* 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:

It will be an interesting day for the cattle markets due to the Cattle on Feed report showing on-feed numbers higher than estimated and at the second highest numbers recorded for the month of September. Feeder cattle placement were also bearish and above trade estimates, adding to the bearishness. Some support might be seen from slightly better marketings, but that may not carry much weight. How much of this has already been factored in with the large decline since the August report, remains to be seen. Traders may feel that futures are already in line with the market. Boxed beef prices continued lower on Friday with choice down $2.28 and select down $0.46. Cash trade will be quiet Monday, but with lower boxed beef and the bearishness of the report, it is unlikely packers will be aggressive buyers this week.

It will be an interesting day for hogs due to Hogs & Pigs report being considered as bullish with both total hog numbers and those kept for marketing below year-ago levels and trade estimates. This is somewhat bullish for the market. However, some of this may have already been factored in with the recent price increase of futures. There was a huge separation of October futures from the rest of the complex on Friday as futures moved closer to cash. Later contracts may move higher based the report showing tighter hog numbers continuing through the end of the year. Cash was finally higher on the National Direct Afternoon hog report posting a gain of $0.40. Cutouts made a huge jump of $6.48 on Friday.

	BULL SIDE		BEAR SIDE
1)	Cattle futures could find support due to the already low prices over the past month. Now that traders know the numbers, a retracement could take place.	1)	The Cattle of Feed report was considered bearish and could push futures down to retest the recent lows.
2)	Marketings were on par with last year, indicating strong demand continues. Lower beef prices should improve product movement.	2)	Steady to lower cash cattle trade last week and declining boxed beef does not provide much hope for a better week.
3)	October hogs made a huge jump to narrow the gap between it and cash. This should continue as it needs to converge over the next two weeks.	3)	Hog futures may have already factored in the friendly Hogs & Pigs report leaving little upside potential left for the time being.
4)	The bullish Hogs & Pigs report should generate buying interest and short-covering Monday pushing futures higher.	4)

**

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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