DTN Early Word Livestock Comments

Cattle: Higher Futures: Higher Live Equiv: $274.48 -$2.48*

Hogs: Lower Futures: Lower Lean Equiv: $84.47 -$1.90**

*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 rallied $2.05 to $2.20 higher Thursday while feeders were anywhere from $2.425 to $4.30 higher. From a technical perspective, live cattle are still facing headwinds at the 200-day moving average, yet the 9-day moving average is still providing strong support. Cutout values for beef were down Thursday. Choice fell $2.52 to $373.98 and select fell $5.85 to $352.62.

Hog futures traded 55 cents higher Thursday -- a small win in a long seven months stretch of lean hog futures sliding lower. The Commitments of Traders report will be released Friday after the close. With futures price action this week, it is unlikely that managed money did much to lift their massive short positions. Pork cutout values fell again Thursday. Carcass values dropped another $1.90 to a value of $77.55.

	BULL SIDE		BEAR SIDE
1)	Expectations for cattle on feed as well as placements are lower for the report next week.	1)	Technical resistance for cattle futures has been a difficult barrier to surpass. Until trade can break through, the market will be limited on how high it can go.
2)	The Feeder Cattle Index continues to be strong as the market is optimistic that cash will lead futures higher.	2)	Beef cutout values fell sharply on Thursday. This will pressure the futures market.
3)	The chance that managed money decides to take profit on their massive short positions could be positive for lean hog futures.	3)	Pork cutout values fell again on Thursday, highlighting the lack of pork demand.
4)	The Livestock, Dairy and Poultry Outlook had a small reduction in third quarter production in September. Any additional reduction on the report Friday could be supportive.	4)	The September Livestock, Dairy and Poultry Outlook showed sluggish pork demand both domestically and in foreign markets. Friday's report is expected to do the same.

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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