DTN Early Word Livestock Comments

Cattle: Steady Futures: Steady Live Equiv: $297.72 -$1.88*

Hogs: Higher Futures: Higher Lean Equiv: $120.09 -$0.20**

*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 prices are still very strong but weakness in futures could continue as we hover above support levels. Tuesday's slaughter is estimated at 120,000 head -- 13,000 more than last week but still 5,000 less than last year. Feeder cattle cash prices are climbing higher in most areas around the country with sale results topping headlines in news outlets and on social media every day.

Hog prices saw strength on Tuesday, continuing their impressive run up with now five consecutive days of strength. Hog slaughter is estimated at 489,000 head -- 34,000 more than last week but close to in line with one year ago.

	BULL SIDE		BEAR SIDE
1)	U.S. cattle inventories remain tight for cattle herds, leading to fewer animals available for slaughter or beef production.	1)	Higher slaughter weights mean more pounds of meat available with less cattle needed to fulfill orders.
2)	Strong beef demand into Labor Day weekend and late summer keeps consumer demand firm. Higher valued meats are still in demand with no sign of backing off as we head into fall.	2)	Cheap feed with pressure on grain prices as well as more feed available with chopping of sileage, allow for producers to build herds or feed to higher weights.
3)	Pork exports are strong despite lack of direction from tariff battles. Mexico and Asian markets lead the way in world demand for U.S. pork exports.	3)	Export forecasts reduced for pork, down 2% to 2.3% due to world competition and uncertainty with Chinese trade.
4)	Back to school and holiday demand still drives the need for retail pork consumption.	4)	CME Lean Hog Index down 26 cents and pork cutout values 20 cents lower. A small signal that demand is weaker.

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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