DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $299.33 +$1.61*

Hogs: Steady Futures: Lower Lean Equiv: $120.70 +$0.61**

*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:

From a technical perspective, cattle futures are still holding support levels despite the recent selloff after the Labor Day holiday. Today will give traders a better perspective if support levels will hold or if we will see another leg lower. A steady to higher market will give fuel to bullish traders to continue holding longs.

Hog prices saw their first day lower in over a week on Wednesday. Fundamentally, there hasn't been much of a shift in market bias. Pork cutout numbers are still strong, and demand is not faltering.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures held technical support levels on Wednesday, giving bullish traders a sign of relief that there may be strength left in the market.	1)	As summer winds down, backyard barbeque demand starts to fade, leaving some uncertainty for continued fall demand.
2)	Record breaking net-long positions in feeder cattle contracts signal strong confidence in further rallies.	2)	Slaughter numbers for Wednesday were higher than last week by 2,000 head, although still behind pace from last year. Higher slaughter weights allow for more pounds of product with less slaughter.
3)	Frozen pork stocks remain tight, with USDA reporting 11% lower inventory than this time last year.	3)	Estimated hog slaughter numbers for week-to-date is standing at 972,000, ahead of this week last year.
4)	Cutout values are firming, showing demand is still prevalent in the higher value cuts of meat.	4)	A futures sell off on Wednesday reflects an incoming bearish sentiment for a correction, at least in the short term.

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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