DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $195.75 -$1.65*

Hogs: Steady Futures: Higher Lean Equiv: $116.42 -$3.09**

*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:

Feedlots were resolved to hold out for steady to higher cash early in the week. Steady cash was obtained in some areas of the South along with $1.00 lower as well. The North saw generally $1.00 lower trade. Packers had sufficient cattle purchased ahead and were unwilling to bid higher to fill in the rest of their needs ahead of the July 4^th weekend. After two very strong weeks of cash gains, feedlots decided steady to slightly lower cash was not all that bad for now. Boxed beef took a hit with choice down $2.26 adding to the decline Tuesday and effectively eliminating the strong gain seen on Monday. Select cuts declined $2.50. Export sales will need to be good to keep prices from drifting lower. Today is the last day to trade June live cattle with August taking over as front month on Friday.

The much-anticipated Quarterly Hogs & Pigs report came and went without much fanfare. The report was neutral for slightly friendly with the actual for most categories slightly below expectations. Every category on the report came in at 99% of a year ago. Hogs kept for breeding was the only category that was just slightly higher than trade estimates but still below a year ago. Cash was higher on the National Direct Afternoon report with a gain of $1.40. Cutouts jumped $3.09 on good movement. Hog weights for the week ending June 25 showed a decline of 3 pounds from the previous week. This is still 3 1/2 pounds higher than a year ago but moving in the right direction. Saturday slaughter is estimated at 9,000 head.

	BULL SIDE		BEAR SIDE
1)	June finishes trading today with August taking over as front month on Friday and is carrying a large discount to cash.	1)	Even with the neutral to friendly Cattle on Feed report last week, cattle futures are struggling to find support.
2)	Cattle futures have been under pressure for six of the last seven trading days and are ready for a bounce likely into the holiday weekend.	2)	With consumer confidence at the lowest level in 16 months, there are concerns over beef demand as the year progresses.
3)	Hog futures have been struggling to find footing over the past week. The neutral to slightly friendly Hogs & Pigs report might support prices.	3)	Hog slaughter continues to run significantly below the year-ago level which keeps sufficient hogs available to the market.
4)	Declining hog weights are expected during the summer but a decline of 3 pounds last week should be supportive.	4)	Packers may not be willing to pay more for hogs the rest of the week as has generally been the pattern.

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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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