DTN Early Word Livestock Comments

		Futures	Equiv
Cattle:	Steady	Lower	Live	$269.16	-$1.77	*
Hogs:	Lower	Lower	Lean	$76.06	-$3.14	**

*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:

Cattle markets resumed their spiral lower on Wednesday with feeder cattle falling another $2.50-$3.125 and live cattle falling 15-85 cents. Morning trade appeared like there was some buying interest, but markets quickly lost footing by midday. As of Wednesday night, there was still no word on how negotiations were going for the California ports. This is a major threat to beef markets on top of an already poor performing week. Cash markets continue to trade lower as it appears like packers have the upper hand. Producers in Iowa described the struggle they've been having, trying to find a buyer for their cattle over the last 30 days. It appears like the market is currently flush with cattle ready for slaughter as they pack on the pounds waiting for shipment. The export data released Wednesday showed lower beef exports with China down 78.2%, as well as the current biggest buyer, South Korea down 1.4% and Japan was flat. Taiwan was the one bright spot on the report, up 20%.

Lean hog futures also traded lower on Wednesday with markets down $1.05-$1.35. Hog weights from last week were reported at 293.5 pounds, up 0.8 pounds from last week and up 1.9 pounds from last year. For the export data released Wednesday, pork and pork products were down 2% year over year. Mexico has been our largest buyer, but was down 6%, while Japan was up 7%. China and South Korea were also down 7% each.

	BULL SIDE		BEAR SIDE
1)	Higher stock market is bullish for cattle.	1)	Cash pressure is expected to stick around for 2-3 weeks until the north can work through the excess cattle ready for market.
2)	Small herd size will remain bullish until something fundamentally shifts the market's position.	2)	Strike threats at Los Angeles and Long Beach ports threaten beef exports.
3)	Lean hog futures appear to be oversold.	3)	Pork cutouts moved sharply lower Wednesday after choppy trade earlier in the week.
4)	A large managed money position can be positive if they liquidate lean hog futures short positions quickly.	4)	U.S. pork and pork product exports are down 2% this year from last year.

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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