DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $218.63 -$2.02*

Hogs: Lower Futures: Lower Lean Equiv: $94.81 -$0.52**

*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:

There have been no cash sales so far this week and none will likely develop Wednesday. The Biannual Cattle Inventory report will be a large focus. It is anticipated inventory will be below a year ago. If that is what the report shows, it will support the market but may not propel the market higher. Futures are in a solid uptrend with the report causing a possible kneejerk reaction, but likely not a substantial move of the market. Boxed beef prices did not perform well Tuesday, which may be a cause for concern. Choice fell $3.35 with select down $1.17. Weakness in boxed beef may keep packers from becoming too anxious to pay more for cattle.

Hog futures continue to find strong buying interest. The April through August contracts pushed through and closed above chart resistance Tuesday. The change in cash has not been evident as packers again did not release the information with the National Daily Direct Afternoon Hog report not showing a price change but a weighted average price of $59.40. Cutouts did not perform well with values declining by $0.52. It is the end of the month and some selling pressure could take place Wednesday as recent profits might be taken.

	BULL SIDE		BEAR SIDE
1)	Some feeder cattle contracts have yet to close the chart gaps above the market. This may take place Wednesday.	1)	The cattle market is overbought, which could trigger technical selling at any time.
2)	The expectation is for the cattle inventory report to confirm tighter cattle numbers and reduced heifer inventory.	2)	Boxed beef is showing some weakness, which may impact the willingness of packers to be aggressive in the cash market.
3)	Hog futures pushed through and closed above price resistance in some contracts. This may provide further technical support for prices.	3)	Traders have not been able to obtain solid information on what cash is doing in the hog market. However, cutouts have been showing weakness.
4)	There is strong optimism that an increase in demand will take place over the next months in both domestic and international markets.	4)	Hog futures are overbought and could see some selling pressure into the end of the month.

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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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