DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $213.88 -0.04*

Hogs: Steady Futures: Higher Lean Equiv: $102.76 +5.23**

*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:

Once cash cattle traded higher earlier this week, traders were content to let futures drift sideways as futures priced in the stronger prices. Cattle in the South sold at $3.00 higher than last week with Northern cattle $4.00 higher. Traders did not want to anticipate what might take place next week, leaving December futures closely aligned with cash. There may be some cash activity Friday, but that is expected to follow the line already set this week. Boxed beef prices were mixed with choice down $0.38 and select up $0.67. Strong consumer demand is expected to continue through the end of the year. Weekly export sales will be reported Friday morning and could have an influence on price direction.

The positive aspect of hog futures is that they put in a higher high and higher low technically. However, the December contract closed at the lowest price since Nov. 2. The more positive influence on the market may be the slight increase of cash on the National Direct Afternoon report of $0.17 and the huge increase of $5.23 in cutouts. Cash trading activity was extremely light Thursday, leaving many scratching their heads in anticipation of what Friday will bring. Weekly export sales will be released Friday morning, hopefully providing support similar to last week. Sales will be watched to see if China made further purchases again. Saturday hog slaughter is projected at 259,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash cattle traded higher for the week, which should keep futures supported and possible higher as traders look ahead to next week.	1)	Traders have not put extra premium in futures even though cash trade is $3.00 to $4.00 higher this week. They are taking a wait-n-see attitude.
2)	A friendly export sales report could cause futures to push above the sideways pattern of the much of the week.	2)	Packers have paid up the past two weeks and may not be willing to increase prices next week. Boxed beef remains choppy even though demand is good.
3)	Although hog futures closed lower, they held well despite the lackluster buying of packers.	3)	Hog weights last week increased slightly from the previous week, indicating hog may be backed up in the market to some extent. This will leave packers less aggressive with cash bids.
4)	The slight increase of cash and the huge jump in cutouts, may influence traders enough to push the market higher. A friendly export sales report would go a long way to make this a reality.	4)	If weekly exports sales do not show China buying or are lower than last week, futures may set back further.

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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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