DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $287.15 -$0.32*

Hogs: Lower Futures: Mixed Lean Equiv: $116.68 -$1.55**

*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:

Cattle futures found footing Wednesday as traders digested the news of the renewal of cattle imports from Mexico and bought the break. This resulted in futures nearly recovering what had been lost Tuesday. However, further strength may be limited due to Northern dressed cattle trading steady to $2.00 lower. Cash trading today should follow suit, with most sales lower. Packers seem to have surrounded themselves with sufficient supplies for the time being. Boxed beef prices were mixed with choice down $0.74 and select up $0.25. Mixed boxed beef prices have been the pattern lately and could indicate demand might be slowing. The markets will be closed on Friday in observance of Independence Day.

Hog futures exhibited bull spreading again Wednesday with nearby contracts closing higher. However, traders lacked conviction as there is concern over demand. The recent decline in cutouts may simply be due to the time of year and the holiday weekend. Retailers had purchased pork earlier and are now waiting to see the movement of pork over the holiday before restocking. Packers were aggressive on Wednesday as they purchased hogs to fulfill their needs for the week. The National Daily Direct Afternoon Hog report showed cash up $0.51. Pork cutouts continued their slide with cutout values down $1.55.

	BULL SIDE		BEAR SIDE
1)	Traders bought the break in the cattle market as they decided the resumption of imports from Mexico would not have much impact on supplies.	1)	The recent slide in cash cattle may continue as demand slows through the summer.
2)	Cattle weights remain above a year ago but have been decreasing. Steer weights averaged 931 pounds in the latest report, 2 pounds lighter than the previous week.	2)	Boxed beef prices have been variable over the past two weeks, indicating demand is slowing seasonally and consumers are reducing purchases due to high prices.
3)	The weakness of pork cutouts may be temporary and demand will resume at a higher pace during July.	3)	Pork cutout prices have been under pressure. That is not expected to change Thursday. Traders are concerned demand may be slowing.
4)	The October and December hog contracts have chart gaps above the market that may be filled at some point.	4)	Traders may remain cautious ahead of the 3-day weekend as they are uncertain about demand. This may keep pressure on hog futures.

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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