DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv $182.89 -$0.32*

Hogs: Lower Futures: Mixed Lean Equiv: $109.13 +$2.00**

* 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:

Cash cattle traded higher as expected with both live and dressed cattle $1.00 higher. Feedlots were able to hold for higher prices with packers needing to procure the cattle required for slaughter this week with some contracted ahead. It will be an interesting day and upcoming week as live cattle futures have not been able to trend higher even though cash traded higher. The pressure on the market mainly stemmed from less-than-desired weekly export sales. This leaves export potential in question through the end of the year as the dollar remains strong to many other currencies. Export sales totaled 16,400 metric tons (mt). Boxed beef was mixed again with choice up $0.30 and select down $2.23. Feeder cattle struggled even though corn futures were under pressure.

Hogs posted a good day right from the start Thursday with all futures contracts opening higher and extending the gains. The downside is now these chart gaps may need to be filled. Cash was not supportive Thursday with the National Direct Afternoon report showing a decline of $3.59 from Wednesday. However, this was offset by a gain of $2.00 in cutouts. Cash hogs are expected lower again Friday, which may temper some of the upside potential. Strong export sales pushed prices higher right from the start as there was fear export sales would not be very strong. Export sales totaled 34,300 mt with China again be listed as one of the top buyers. They have been fairly consistent for a while now. Exports to China during the month of August totaled 32,436 mt, up 21% from a year ago. Saturday hog slaughter is expected 150,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash cattle traded solidly higher for the week. This will provide feedlots with more confidence to hold for higher prices again next week.	1)	Feeder cattle futures could not find strength, even though corn was under pressure much of the day.
2)	Cattle futures may be building support as traders see higher cash and tighter supplies in the future.	2)	Low export sales keep the concern over international demand slowing. This also is true for domestic demand.
3)	Strong export sales indicate international demand remains strong. China continues to buy pork with purchases higher than last year.	3)	Hog futures left a chart gap on the open Thursday which may be filled before the market trends higher.
4)	Hog futures have regained the losses from Tuesday, indicating the losses might have been an aberration rather than a fundamental reality.	4)	Cash is expected lower for hogs as most packers have their needs purchased for the week.

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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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