DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $208.71 -$1.05*

Hogs: Steady Futures: Mixed Lean Equiv: $88.80 -$0.12**

*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:

June and later live cattle contracts made new lows before buyer interest became more aggressive, bringing April through August contracts back in positive territory. Bull-spreading was taking place as traders wanted to get in the market but with limited risk. There was a report that a few cattle traded $1.00 higher in Iowa, but in general there was no activity. It is difficult to determine how aggressive packers will be as boxed beef prices were lower Tuesday with choice down $1.10 and select down $2.39. With some cattle already purchased for delivery this week and weakness of boxed beef, packers may not be very aggressive with the potential for cash steady at best. Feeder cattle were able to close higher in response to the weakness of corn. Feeder cattle prices at auctions recently have been mixed, depending on the weight categories. March feeder cattle cease trading next week on Thursday with futures about $1.00 higher than the index.

Hog futures tried to remain in positive territory, but traders seem to be purchasing futures followed with a close stop loss which are being targeted by sellers. The positive aspect was that it was another inside trading day, which may build some technical support. Cash was finally higher with the National Direct Afternoon Hog report showing a gain of $1.60. Cutouts showed a slight loss of $0.12. There continues to be some concern over demand in light of the outside financial market uncertainties. The Federal Reserve will announce their interest rate determination Wednesday.

	BULL SIDE		BEAR SIDE
1)	Some very light cattle trade in Iowa at $1.00 higher Tuesday could set the stage for the rest of the week.	1)	Live cattle futures made new lows Tuesday before buying interest pushed contracts back up. The recent trend is still down.
2)	Feeder cattle could find more support due to further weakness of corn futures and the grain complex in general.	2)	Boxed beef prices continue to struggle, which may impact what packers will pay for cattle. Cash may be steady at best this week.
3)	Hog futures posted another inside trading day, which could provide some technical support to the market as the market consolidates.	3)	Hog futures have not been able to rebound with continued lower closes. Traders that are bottom-picking the market continue to get stopped out of their positions.
4)	Hog futures are very oversold, which could trigger short-covering at some point.	4)	Cutouts have not been able to find solid support. Demand is good but not good enough.

**

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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