DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $229.06 -$0.69*

Hogs: Higher Futures: Mixed Lean Equiv: $105.93 -$0.62**

*Based on the formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. The 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:

Feeder cattle led the charge Wednesday with futures breaking through and closing above technical resistance. Live cattle futures are heading to the highs set in March. The limiting factor Thursday might be the upcoming Cattle on Feed report. Traders may either take some profits or protect their positions with other strategies ahead of the report and the extended weekend. Estimates for the report are for an on-feed number on May 1 of 99.1% of a year ago. Placements in April at 93.3% and marketings at 109.5%. The range of estimates for the on-feed number is 97.9% to 100.5%. Placements again have a wide range of 86.5% to $104.5% and will keep traders cautious going into the report. The range for marketing is from 108.6% to 110.7%. Boxed beef prices were lower with choice down $0.85 and select down $1.26.

Hogs remained unable to find support Wednesday. The cash and cutouts weakness on Wednesday does not provide support for Thursday. The National Direct Afternoon Hog report showed cash down $0.37. Cutout values declined by $0.62. There is continued talk about the concern over demand but hog slaughter continues to run above the previous week and year. More hogs are being processed for a reason. Weekly export sales may indicate an increase in international demand. The technical aspect of the market has been bearish with prices heading to test the lows from February. Saturday slaughter is estimated at 12,000 head.

	BULL SIDE		BEAR SIDE
1)	The trend is your friend and traders continue to follow the trend. Feeder cattle closed above resistance, which may increase buying interest.	1)	There is a chance for a bearish surprise on the Cattle on Feed report and traders may take steps to limit their exposure.
2)	Analysts expect some friendly numbers on the Cattle on Feed report, which may limit profit-taking ahead of the report.	2)	The weakness of boxed beef prices Wednesday may indicate the buying for Memorial Day has run its course and demand may slow as consumers grapple with high beef prices.
3)	Hog futures are significantly oversold and may bounce ahead of the extended weekend.	3)	Hog weights remain 3.9 pounds higher than a year ago, keeping packers active but not aggressive in the cash market.
4)	Hog weights remained unchanged from the previous week at 287.9 pounds. Higher slaughter is keeping market-ready hogs current.	4)	The trend is down with new lows nearly every day. Funds continue to exit their long positions with the market struggling to find fundamental support.

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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