DTN Early Word Livestock Comments

Cattle: Lower Futures: Higher Live Equiv: $237.86 +$1.02*

Hogs: Higher Futures: Higher Lean Equiv: $105.27 +$2.62**

*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:

The anticipation that feedlots may be more anxious to move cattle now that higher trend for cash may have ceased may come to fruition. Showlists are higher, indicating a greater desire to sell cattle. No bids or offers were posted Monday, leaving traders guessing about price direction. Boxed beef prices were higher with choice up $1.63 and select up $1.02. Even though cattle futures bounced Monday, the downtrend is still intact. Traders may be cautious about buying into the market aggressively until they see cash trade develop. Feeder cattle bounced but prices in the country were lower last week and remained that way Monday.

At one point early in the day, hog futures fell substantially, but then regained much of what was lost. There was no real explanation for the quick decline other than sell stops may have been triggered. The trend remains higher with the May and later contracts making new contract highs again Monday. The National Daily Direct Afternoon price was not released due to a limited amount of hogs purchased not being representative of the market. Pork cutout values were $2.62 higher at an average of $99.62. Packers should be more aggressive Tuesday as they need to purchase hogs to maintain the higher slaughter pace.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures are holding a discount to cash. Futures should move higher to be more in line even if cash is lower this week.	1)	The recent downtrend in cattle futures remains intact. Futures may not rebound but wait for cash trade to develop.
2)	Much of the recent bearish news may be factored into the market, which could provide support as traders may be confident to buy the market.	2)	Feedlots seem more anxious to move cattle this week as higher show lists are posted.
3)	New contract highs in hog futures keep the uptrend intact. Traders are optimistic about prices.	3)	Pork cutout prices continue to lack solid support. Prices fluctuate significantly throughout the week.
4)	The higher hog slaughter pace indicates demand is improving and packers need to purchase supplies to maintain the higher pace. Pork demand is benefiting from high beef prices.	4)	Traders seem nervous at current hog futures prices as was seen on Monday with the wide intraday price swings.

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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