DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $195.27 -$0.48*

Hogs: Steady Futures: Higher Lean Equiv: $115.11 -$1.31**

*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:

Live cattle futures were able to close higher in most contracts, but certainly nothing to get excited about. Most cash trading is finished for the week leaving little to go on other than the strength of feeder cattle. Feeder cattle jumped on weakness of corn. Other than that, feeder cattle also had little to go on as auctions this week generally showed mixed price activity. Boxed beef prices were again lower with choice down $0.88 and select down $0.24. Weekly export sales were much better than the previous week at 17,000 MT, up 52%. China continues to be a consistent buyer. Futures are expected to drift today into the holiday weekend.

Hogs took it on the chin yesterday even though the Hogs & Pigs report was neutral to friendly. Many times, the livestock market move opposite the direction a report indicates only to trade the report numbers a day or two later. Today being the day before a holiday weekend may not be that day as trade typically is lighter and choppy. Retail orders next week should reflect the movement of pork over the holiday. Cutouts jumped $3.09 yesterday but the National Direct Afternoon report showed cash down $2.27. Weekly export sales were good at 32,200 MT, up 27% from the previous week. Saturday slaughter is estimated at 9,000 head.

	BULL SIDE		BEAR SIDE
1)	Corn weakness should provide better margins for beef production and may allow feedlots more confidence to hold for higher cash next week.	1)	Live cattle did not receive much benefit from the strength of feeder cattle and lower corn prices which leaves the market rather negative.
2)	Good export sales and a strong slaughter pace should provide support under the beef market.	2)	Live cattle may retest chart support from a month ago if fundamentals do not turn more bullish.
3)	Hogs faded the report yesterday but were able to close above chart support. This may bring technical traders back into the market more aggressively.	3)	Hog slaughter continues to run at a less than desired pace. Leaving plenty of hogs available for packers.
4)	Good export sales and strong cutouts yesterday may provide support to the market after the holiday weekend.	4)	Demand concerns continue to abound keeping traders cautious about buying into the market. Differed contracts have been unable to find solid support.

**

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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