DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $200.39 -$0.23*

Hogs: Lower Futures: Higher Lean Equiv: $116.74 +$4.62**

*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:

Cattle have achieved what was thought to be unachievable at the beginning of the week. Strong cash buying took place Wednesday and continued Thursday. Southern trade $1.00 higher and Northern dressed trade $3.00 to $4.00 higher provided the needed support, moving futures into the large chart gap remaining since April 25 in the June contract. Later contracts have quite a distance to move to get to the chart gap. Boxed beef prices were nothing to write home about with choice down $0.64 and select up $0.20. Weekly exports sales did not spark any buying interest with sales slightly lower than last week at 17,700 metric tons (mt). China continues to be a consistent buyer of beef. The cattle complex may drift Friday with the focus of traders likely the World Agricultural Supply and Demand report.

Hog futures could not find any support again Thursday with July and August contracts hit hard. Traders seemed to focus on the low export sales number of 16,700 mt as that may back up supplies. Hog weights have increased, adding to the bearishness. June hogs will cease trading next Tuesday with July carrying nearly a $2.00 discount. Cutouts jumped Thursday with a gain of $4.62. That did not turn the attention of traders yesterday but may play a greater role Friday, triggering some buying interest. Saturday slaughter is estimated at 20,000 head.

	BULL SIDE		BEAR SIDE
1)	Strong cash cattle this week is expected to influence cash trade next week. Feedlots will want more, seeing how aggressive packers were this week.	1)	Other than the strength of cash, cattle have little else to go on. Higher fuel and food prices may impact beef demand.
2)	Chart gaps above the market may keep technical traders buying into the market. June has already moved into the gap.	2)	Boxed beef prices seem to have stalled this week and may be an indication of consumers reducing purchases of higher end cuts of beef.
3)	Strong cutouts Thursday may provide support Friday. Consumer demand remains strong.	3)	Increased hog weights leave more tonnage available to the market. Lower exports provided little support.
4)	There are a lot of hogs being processed, which should keep supply from backing up in the country.	4)	July hogs have a chart gap $3.70 below the closing price Thursday. That gap may be filled at some point.

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For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. 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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