DTN Early Word Opening Livestock

Cattle: $1-3 LR Futures: 50-100 LR Live Equiv $131.25 - .58* 
Hogs: $1-2 LR Futures: 50-100 LR Lean Equiv $ 93.43 -1.21**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Cautious cattle buying interest should slowly build Thursday and/or Friday. Opening bids Thursday should start out around $106 to $107 in the South and $172 to $173 in the North. Look for asking prices to be restated around $108 to $110 in the South and $175 plus in the North. Live and feeder futures should open moderately lower, pressured by bearish momentum and defensive fundamentals.

Hog buyers should resume work Thursday with bids $1 to $2 lower than Wednesday's close. The country offering remains generous and carcass value continues to struggle. Saturday's kill should be around 132,000 head, pushing the weekly total close to 2.33 million. Lean contracts are expected to begin on the defensive, checked by residual selling pressure and signs of struggling product demand.

	BULL SIDE		BEAR SIDE
1)	Signs of accelerated wholesale beef volume suggests that lower prices are slowly working to reinvigorate demand. Total volume in the comprehensive boxed beef report increased by 400 loads last week to 7,307 loads, up 19% from last year, and was the largest weekly total since the last week of October.	1)	Beef cutout closed significantly lower again at midweek with the choice/select spread continuing to narrow. Box supplies were described as "heavy."
2)	Going forward, the spread between beef and pork at the wholesale level is expected to remain considerably more narrow than is seasonally expected, possibly enticing retailers to switch back to beef features heading into the fall timeframe.	2)	Though the cash cattle trade was not well tested Wednesday, scattered sales were clearly lower (i.e., off $3 live; off $2 to $3 dressed).
3)	Mexico set a record for the single highest June for any country to import product from the U.S. Mexico's June number of 142 million pounds was more than 20% above 2016. Furthermore, Mexican export demand shows no signs of slowing down given domestic production difficulties not able to meet the demands of its growing middle class.	3)	The pork carcass value dropped another buck plus on Wednesday, pressured by further losses in the belly primal (off $6.31).
4)	Resisting the seasonal trend to get heavier, Iowa barrows and gilts averaged just steady with the prior week at 276.6 pounds (still 1.9 lbs. bigger than 2016).	4)	For the week ending Aug. 19, U.S. hatcheries set 226 million eggs in incubators, up 5% from a year ago. At the same time, chicks placed totaled 184 million chicks; up 4% from 2016.

OTHER MARKET SENSITIVE NEWS

CATTLE:(USDA) -- All cattle and calves in the United States and Canada combined totaled 116 million head on July 1, 2017, up 4 percent from the 111 million head on July 1, 2015. All cows and heifers that have calved, at 46.6 million head, were up 5 percent from 2015.

All cattle and calves in the United States as of July 1, 2017, totaled 103 million head, 4 percent above the 98.2 million head on July 1, 2015. All cows and heifers that have calved, at 41.9 million head, were up 5 percent from 2015.

All cattle and calves in Canada as of July 1, 2017, totaled 13.0 million head, up slightly from the 12.9 million head on July 1, 2016. All cows and heifers that have calved, at 4.74 million head, were up 1 percent from a year ago.

HOGS: (USDA) -- United States and Canadian inventory of all hogs and pigs for June 2017 was 85.8 million head. This was up 3 percent from June 2016, and up 7 percent from June 2015. The breeding inventory, at 7.34 million head, was up 1 percent from a year ago and up 2 percent from 2015. Market hog inventory, at 78.4 million head, was up 3 percent from last year and up 7 percent from 2015. The semi-annual pig crop, at 78.5 million head, was up 4 percent from 2016 and up 7 percent from 2015. Sows farrowing during this period totaled 7.34 million head, up 3 percent from last year and up 5 percent from 2015.

United States inventory of all hogs and pigs on June 1, 2017 was 71.7 million head. This was up 3 percent from June 1, 2016 and up 1 percent from March 1, 2017. The breeding inventory, at 6.07 million head, was up 2 percent from last year, and up slightly from the previous quarter. Market hog inventory, at 65.6 million head, was up 4 percent from last year, and up 1 percent from last quarter. The pig crop, at 32.3 million head, was up 4 percent from 2016 and up 9 percent from 2015. Sows farrowing during this period totaled 3.06 million head, up 3 percent from 2016 and up 7 percent from 2015.

Canadian inventory of all hogs and pigs on July 1, 2017 was 14.1 million head. This was up 2 percent from July 1, 2016 and up 6 percent from July 1, 2015. The breeding inventory, at 1.28 million head, was up 1 percent from last year and up 2 percent from 2015. Market hog inventory, at 12.9 million head, was up 2 percent from last year and up 6 percent from 2015. The semi- annual pig crop, at 14.9 million head, was up 3 percent from 2016 and up 5 percent from 2015. Sows farrowing during this period totaled 1.27 million head, up 1 percent from last year and up 2 percent from 2015.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

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