DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $188.25 -$0.45*

Hogs: Higher Futures: Mixed Lean Equiv: $93.54 -$3.84**

*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:

No cash business took place Tuesday as packers have not yet showed interest. They are waiting to see how many cattle are available and what feedlots are asking. It is possible business will be delayed until Thursday due to limited trading interest shown so far. Slaughter pace running as strong as it is will require packers to purchase what they need. However, there is indication that slaughter pace is beginning to slow. Boxed beef prices were mixed again Tuesday with choice up $0.21 and select down $2.71. Feeder cattle are having a difficult time trending higher due to the choppy corn market and the uncertainty over demand early next year.

Hogs slowed the decline Tuesday with December able to close higher. The recent decline will be difficult to overcome in light of continued weakness of cutouts. It is hoped demand would increase moving through the end of the year, but there is no indication of that currently. The weakness of cutouts again Tuesday, showing a decline of $3.84, indicates lower prices are needed to move product. Even though pork products are struggling, slaughter continues to remain strong with packers showing no indication of slowing. It is as if they are building inventory as much as they can at the present time.

	BULL SIDE		BEAR SIDE
1)	There is strong potential cash cattle will trade higher this week and packers seem to be short-bought after last week.	1)	Even though there is anticipation of higher cash this week, traders remain cautious over further price potential.
2)	Liquidation may have run its course again with stability returning Tuesday. Futures are poised to move higher if cash trades higher.	2)	Feeder cattle may lose some of the gains seen Tuesday as corn futures are higher.
3)	Strong slaughter pace for hogs should keep marketings current. An increase in demand would find tighter supply and higher cash.	3)	Hog futures were unable to bounce in later contracts Tuesday. Lower cutouts may keep pressure on the market.
4)	December hogs are running at a discount to the index with two weeks remaining to trade.	4)	Pork inventory is building, leaving sufficient supply available if demand improves and slaughter decreases.

**

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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