DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $246.72 +0.46*

Hogs: Lower Futures: Higher Lean Equiv: $138.25 +1.93**

* based on formula estimating live cattle equivalent of gross packer revenue.

(The Live Cattle Equiv. 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:

Feeder cattle and deferred live cattle contracts put in a good showing Thursday as the cyberattack is basically history except for the cleanup. The aftereffects will be getting slaughter numbers caught up to minimize a backlog. Feeder cattle found support from falling grain prices. Cash did not change Friday and really was not expected to. Southern trade was mostly at $119 to $120, which is steady to $1.00 than last week. Northern cattle traded at $191 and steady with last week. No fuel there to start any kind of fire under the market. The huge surge of boxed beef on Wednesday did not follow though as aggressively Thursday. Choice increase $0.39 with select of $1.28. There is hope the surge of boxed beef this week will be the foundation for higher cash next week. However, there is concern that there may be some backlog of cattle that will need to be cleaned up in the near term. The trade will watch this closely. Weekly export sales will be released Friday morning, delayed due to the holiday on Monday.

Hogs recorded another impressive day with June and October through May contracts posting new highs. Hog futures are back above nearby cattle contracts again, a place where they seldom have been. Packers were again aggressive purchasing a substantial number of hogs Thursday, but at slightly lower prices with the National Direct price down $0.20. Continued strength of cutouts and the indication that supplies may tighten, has traders ready and willing to purchase futures. The weekly Export Sales report will be watched for both volume and whether China remained a strong buyer. Saturday hog slaughter is projected at 193,000 head. This was quite the increase from the previous projection. More hogs are being added as plants want to make up for lost time.

	BULL SIDE		BEAR SIDE
1)	Cash cattle have been able to trade no less than steady for a few weeks building strong support. Higher boxed beef should cause packers to be more aggressive.	1)	Nearby live cattle futures are having difficulty uncovering buyer interest to turn the trend back up. Cash will need to increase to get the attention of traders.
2)	Continued strong demand for beef may negate the seasonal slowing of demand. Lighter carcass weights require more cattle to be purchased.	2)	Cattle may back up in the market for a brief period of time, which may keep packers from bidding higher next week.
3)	New contract highs seem to be a daily occurrence. Strong demand and the potential of tightening supply will keep the uptrend intact.	3)	Packers purchased a lot of hogs the past two day, which may leave them on the sidelines Friday with lower bids.
4)	A positive weekly export report would provide further support under the market.	4)	The July contract still has not closed the chart gap below the market at $116.85. Gaps are generally filled.

**

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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