DTN Early Word Livestock Comments

Cattle: Lower Futures: Higher Live Equiv: $270.62 +$0.69*

Hogs: Higher Futures: Higher Lean Equiv: $99.54 +$3.22**

*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:

The delayed October and much-anticipated November Cattle on Feed report was released. The report was neutral to friendly, as on-feed numbers were nearly what was expected at 97.9%. Placements in October were friendly, with the actual coming in at 90% and lower than estimates. This was no surprise as cattle are not being imported from Mexico, and some minor heifer retention is being noted. Marketings were slightly lower than estimates at 92%. The October report was also released, but it does not have much impact on the market, as it is after the fact. Placements were higher in September than expected, but still 6% lower than the previous year. The greater impact on the market was lower cash for the week, with Northern dressed cattle down $6.00 and Southern live down as much as $6.00. Boxed beef was higher, with choice up $0.20 and select up $2.80. For the week, choice declined $3.78 with select down $2.61. Futures may find some stability, but a higher trend may be difficult to unfold.

Hog futures could not find support, closing at new lows again. Traders see little fundamental support to generate buying interest. Cash prices continue to weaken, with the National Daily Direct Afternoon Hog report down $1.23. Packers were not aggressive in their buying last week and may not be again this week due to the Thanksgiving holiday. Pork cutouts jumped $3.22 and may have some impact on the market today. Traders are unlikely to turn aggressive buyers this holiday-shortened week unless they intend to cover some short positions to close out the month later in the week.

	BULL SIDE		BEAR SIDE
1)	Placements in feedlots in October were 10% below a year ago. This should provide support for futures.	1)	Tyson is closing the Lexington, Nebraska, plant and moving the Amarillo, Texas, plant to a single shift, which might put pressure on the market.
2)	Last week's bearish news has been thrown at the market, and traders have had the weekend to digest the news. Renewed buying interest may develop at the lower prices.	2)	The import tariffs on Brazilian beef have been eliminated, making it possible for an increase in beef imports.
3)	A significant increase in pork cutout prices on Friday could indicate that lower prices may finally increase demand.	3)	Hog futures continue to make new lows, and traders continue to trade with the bearish trend.
4)	Hog futures remain significantly oversold and may see short covering and positioning ahead of Thanksgiving and the end of the month.	4)	Increasing hog weights continue to keep pork supplies plentiful. Higher supplies are offsetting better demand.

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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