DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $194.59 +$0.58*

Hogs: Lower Futures: Mixed Lean Equiv: $129.91 -$1.48**

*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:

Cattle had a strong week as slaughter was brisk and packers were aggressive. Cash cattle traded from $2.00 to $5.00 higher, depending on the area, adding to the developing bullishness of the market. Even though futures settled back on Friday, the uptrend is intact. Demand remains strong with Labor Day weekend three weeks away. Boxed beef was higher on Friday with choice up $0.27 and select up $2.13. Lower corn futures overnight should provide support to feeder cattle, which could spill over to the live cattle. USDA did estimate higher beef production this year, compared to their previous estimate, increasing production by 68 million pounds while at the same time increasing the average price by $0.80 to $142.10.

August hogs went off the board Friday with October moving to front month. The contract lost $1.05 with some pressure from spread trading and the fact that cutouts did not perform as well last week as hoped. Cutouts on Friday were down $1.48. However, the surprise was the strength of cash to end the week as the National Daily Direct Afternoon Hog report showed a gain of $2.32. This breaks the pattern of the past weeks as it has been some time since we have seen stronger cash on Friday. Estimated slaughter on Friday was low, which may set the stage for an interesting week.

	BULL SIDE		BEAR SIDE
1)	Cattle have been in a strong uptrend, which is not expected to change in the near term.	1)	If October cattle fill the chart gap with the overbought market, it could trigger more aggressive selling.
2)	Feedlots will be looking for higher cash this week, expecting packers will need more cattle to fill demand for the upcoming Labor Day weekend.	2)	In three weeks when Labor Day demand is finished, there could be a little void with fall demand possibly not being as strong.
3)	October hogs have large shoes to fill but strong demand and tightening supplies might help to accomplish that as cash remains strong.	3)	Pork cutouts did not perform as well last week as they had been in previous weeks. This could indicate a slowing of demand.
4)	Higher cash hogs Friday were a bit unusual but may have set the stage for a positive week.	4)	Traders may not be too anxious about buying aggressively until they see the evidence of demand over the weekend and how aggressive packers may be.

**

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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