DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $220.24 -$0.98*

Hogs: Lower Futures: Higher Lean Equiv: $90.10 -$0.68**

*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:

Live cattle struggled for a while Wednesday until there was some light cash trade. The cash trade was very light and did not provide a good indication of what may transpire Thursday. A few cattle traded in Texas at steady cash with last week. However, a few cattle traded in Kansas at $6.00 higher. Some activity in the North traded steady with last week. The odds are cash may trade steady overall, which was likely the reason nearby live cattle contracts closed higher. Boxed beef prices were lower with choice down $1.32 and select down $1.46. This could be an anchor that may subdue the strength of cash this week. Traders are also looking ahead to the Cattle on Feed report to be released Friday. Estimates are for on-feed numbers on May 1 at 96.5%; placements in April at 96.4%; and marketings in April at 90.2%. Feeder cattle futures pushed higher to match contract highs or make new highs, but could not hold into the close, finishing the day lower despite the large decline of corn futures.

Hog futures did see some follow-through opening higher, but the initial strength was short-lived with futures falling back to post triple-digit losses with August showing the greatest pressure. Traders followed the recent pattern that has developed with a few days of gains being met with heavy selling as funds remain net short in the market. Two days of little indication of cash strength did not help traders feel comfortable. The National Direct Afternoon Hog report finally showed what cash was doing with a gain of $1.95, moving the weighted average to $84.74, which is near where June hogs closed yesterday. Cutouts declined $0.68 Wednesday, keeping the market on a defensive. It will be interesting to see whether the market will trade higher cash or lower cutouts Thursday.

	BULL SIDE		BEAR SIDE
1)	The prospect for steady cash cattle seems to be gaining some traction, which may support futures.	1)	Feeder cattle could not close higher in the face of substantially weaker corn prices. Technically, feeders could have established a double-top.
2)	Feeder cattle may trade higher due to a delayed reaction to weak corn prices Wednesday and further weakness overnight.	2)	If cash cattle show slightly lower trade in any category, futures could see further pressure.
3)	Cash hogs have been steadily improving with the weighted average price about $10.00 higher than it was not too long ago.	3)	Lower pork cutouts continue to keep the market from trending higher.
4)	It is possible packers have yet to finish their purchasing for the week, which could result in higher cash Thursday.	4)	The sharp decline of hog futures Wednesday may shake the confidence of bullish traders, resulting in follow-through selling Thursday.

Register today for the upcoming DTN Ag Summit Series event, "Crop Updates from the Field." We will visit with farmers from across the country, talk about the latest dicamba and pesticide news and discuss DTN's latest weather and market outlooks. The program begins Tuesday, May 23, at 8:30 a.m. CDT. We understand if you're too busy to attend live. It will be available for replay; however, you must register before the May 22 deadline to gain access. Registration is free, and you can find more details here: www.dtn.com/agsummit

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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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