DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: N/A*

Hogs: Lower Futures: Lower Lean Equiv: N/A**

*Based on the formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. The 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 trade is expected today but it is uncertain what prices will do. The USDA did not release any reports on Tuesday keeping traders guessing what boxed beef prices did. The hope is that cash cattle will trade no worse than steady this week. However, the packers had purchased a significant amount of cattle ahead possibly leaving them in the position to hold the line on prices or even maintain lower bids due to next week also being a holiday week. It may be up to feedlots if they want to hold cattle over or move some even if it means steady to lower prices. Feeder cattle futures fell back hovering near the lows of the range and possibly testing support.

Hogs were mixed on Tuesday and much the same is expected today. Traders did not have the cash or cutout reports to provide direction. The expectation is for cash to be lower today but that will depend on whether the packers may want to position themselves ahead of another holiday-shortened week. Futures are expected to remain sideways possibly through the end of the year as holiday demand is assessed.

	BULL SIDE		BEAR SIDE
1)	If cash cattle trade higher this week, futures may move back toward the highs over time.	1)	Cattle futures may drift sideways through the rest of the year with traders unwilling to establish long-term positions.
2)	Beef demand is expected to remain strong through the end of the year. Cattle supplies continue to remain tight.	2)	It is uncertain when the border will be reopened to cattle imports from Mexico. That would put initial pressure on the market as traders react to the news.
3)	The Hog and Pigs report has been digested and traders have adjusted to the numbers. This may provide confidence to buy into the market.	3)	Hogs need to continue to see strong demand or futures will break below technical support as further liquidation could take place.
4)	The Packers may be aggressive today as they may purchase hogs ahaed for another holiday-shortened week. Demand may be better than expected.	4)	Cash hogs may trade lower today as the packers may have much of the purchased finished for the week.

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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