DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $277.85 +$2.87*

Hogs: Steady Futures: Mixed Lean Equiv: $92.94 +$1.53**

*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:

Live cattle futures as well as feeder cattle prices were under pressure Monday with support levels still holding. Feeders have found a bit more strength than fats lately but with producers beginning to wean across the Plains, seasonal pressure may be on the horizon. Imported beef prices were lower with light trade activity. With recent immigration arrests, processors struggled with a shortage of plant workers, but most have returned to work this week. Slaughter volumes are expected to remain steady at some of the highest numbers we have seen in the calendar year.

Hogs found strength on Monday on slightly better pork demand. Pork cutout values were higher on Monday while slaughter numbers remain strong. With the momentum hog futures have seen, the market approached a two-week high.

	BULL SIDE		BEAR SIDE
1)	Strong cash trade in cattle brings hope for future price momentum.	1)	Margins bring concern to processors with boxed beef weakness and tight cattle supplies.
2)	Live cattle supplies are still tight, bringing tight slaughter numbers available for processors to purchase.	2)	The Mexican ports are slowly gaining traction with larger volumes of cattle crossing the border each week.
3)	The funds are holding a record short position in hog futures. Any supportive fundamental news could trigger significant short-covering.	3)	Record funds short positions are difficult to get much momentum without a more substantial storyline to cause a meaningful shift in trade bias.
4)	Cutout values show some new strength in pork demand.	4)	Hog supplies are plentiful, putting a damper on much hope for a continued rally.

For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CDT. 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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