DTN Early Word Livestock Comments

		Futures	Equiv
Cattle:	Steady	Lower	Live	$270.93	+$0.81	*
Hogs:	Higher	Higher	Lean	$79.20	+$0.15	**

*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:

Tuesday was another disappointing day in futures markets for live and feeder cattle contracts. December live cattle futures are now trading below every major moving average. The trend line support is roughly $3 below Tuesday's settlement, so we'll see if that holds in Wednesday's trade. Cash trade is $223.88, $2.67 below last week. Beef cutouts were higher on the day with the largest gains seen in select. Average carcass weights were 902 pounds, up 3 pounds since last week and 13 pounds higher than last year. Strike threats loomed over markets at Los Angeles and Long Beach ports after they decided on a short-term extension to postpone a strike until 5 p.m. PST Wednesday afternoon. Approximately 25% of beef exports pass through those ports, so a strike would be a direct blow to cattle markets.

Lean hog futures also traded lower Tuesday, with only the December contract showing any gains. Pork cutouts were slightly higher Tuesday, but we will need some major fundamental news to get lean hog futures out of this major slump that it has been in. Poor cash prices and falling wholesale pork prices have been pressuring the market for months, making new contract lows this week. China's abundance of pork supply is weighing on the U.S. markets as there is limited export demand.

	BULL SIDE		BEAR SIDE
1)	Low placements and low cattle on feed will help support the market.	1)	Heavy carcass weights for cattle keep packers comfortable with output.
2)	Support from the high Feeder Cattle Index will keep futures from trailing too far from cash prices.	2)	Strike threats at Los Angeles and Long Beach ports threaten beef exports.
3)	Lean hog futures appear to be oversold.	3)	China's abundance of pork supply is limiting U.S. export demand.
4)	Two days in a row of higher pork cutout prices is encouraging.	4)	Negotiated cash prices for hogs show that packers have limited concern for future supply.

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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