DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $221.53 +$1.44*

Hogs: Higher Futures: Higher Lean Equiv: $91.41 +$0.65**

*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 futures moved back near the highs again with a few contracts pushing to new contract highs. The final cash trade for the week showed Southern live cattle averaging steady money with last week while Northern dressed cattle were steady to $2.00 higher. Higher cash, even though boxed beef has been struggling over the past few weeks, indicates packers had run short of cattle. They finally needed to step up as feedlots were more intent on receiving no worse than steady cash. Boxed beef prices were higher with choice up $2.79 and select up $0.33. The Cattle on Feed report was neutral with all categories nearly right in line with the average trade expectations. It is uncertain how the market will react to a neutral report as well as the news that an atypical BSE case was confirmed in an older beef cow at a South Carolina slaughter plant. Beef from the animal never entered the food system. This should not impact beef trade. Feeder cattle continued to push to new contract highs as feeder supply is tight and in demand at auctions.

Hog futures took a beating, moving June back down to the contract low with later contracts establishing new lows. Funds continue to be in control and sell any and all price rallies. There should have been some support Friday as both cash and cutouts moved higher. It is unusual for cash to increase on Friday, but it gained $1.45 on the National Direct Afternoon Hog report with cutouts gaining $0.65. Packers needing to step up Friday to purchase hogs more aggressively may put them in a position to begin this week more aggressively as well. Traders will be cautious.

	BULL SIDE		BEAR SIDE
1)	The Cattle on Feed report was neutral, which should provide support under the market.	1)	A neutral Cattle on Feed report and the atypical BSE case may not be bearish to the market, but it may trigger some selling just because it is unexpected news and traders react.
2)	The atypical BSE case found in an older cow in South Carolina should not impact the market as it never entered the food supply and should not impact export status.	2)	Feeder cattle are at very lofty prices and may run out of buying interest as high prices will cure high prices.
3)	Strong cash hogs Friday and higher cutouts should provide some support Monday.	3)	July and later hog contracts established new lows on Friday. There may be follow-through selling.
4)	It seems packers have become more aggressive over the past weeks with cash trading higher most days.	4)	Price increases in hog futures continue to be short-lived and will take a monumental effort to change that attitude.

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 midnight, Monday May 22, 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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