DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $197.52 -$1.34*

Hogs: Higher Futures: Higher Lean Equiv: $139.09 +$3.32**

*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:

Traders in the cattle complex seemed more concerned over what was taking place in other markets as well as what impact the Pelosi visit to Taiwan could have on beef. China has been a consistent buyer of U.S. beef and there is concern China may retaliate through increasing tariffs or purchasing fewer agricultural products for a time. That would not be supportive to beef prices as it could reduce export demand at a time when cattle supplies are plentiful. Boxed beef prices declined Tuesday with choice down $2.14 and select down $1.35. There were a few cattle traded Tuesday at steady prices with last week, but not enough to determine cash for the week.

Hogs could not find much support Tuesday with spread trading taking place, putting pressure on August and October contracts. Traders were eagerly awaiting to see whether packers would follow the weekly pattern of higher cash on Tuesday and were not disappointed. The National Direct Afternoon Hog report showed cash up $5.19. There is a strong possibility cash will be higher again Wednesday. Cutouts were also strong with a gain of $3.32 supported by a gain of $26.57 for bellies. This will likely influence trading activity Wednesday.

	BULL SIDE		BEAR SIDE
1)	If cash is no worse than steady this week, traders may feel more confident the market may have found support.	1)	Packers are expected to remain unaggressive this week and may bid lower for cattle. Feedlots do not seem in the position to hold out.
2)	Slaughter pace remains brisk, which is moving through heavier cattle supplies, keeping market-ready cattle current.	2)	The concern over the impact of Pelosi's visit to Taiwan may leave the market subdued with little direction.
3)	Strong cash and cutouts for hogs should be reflected in Wednesday's trading activity with traders buying more aggressively.	3)	Hog slaughter still is running at a less-than-desired pace. This leaves sufficient supply available to packers.
4)	Packers are expected to bid up for hogs again Wednesday as demand continues to hold well as reflected by strong cutouts.	4)	Traders anticipate higher cash again Wednesday which may be already factored into the market due to this being a consistent pattern by packers.

**

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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