DTN Early Word Livestock Comments

Cattle: Lower Futures: Lower Live Equiv: $284.14 -$0.90*

Hogs: Higher Futures: Higher Lean Equiv: $128.00 +$3.16**

*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:

Cash cattle declined in both categories after an impressive run higher. Surprisingly, traders did not liquidate more heavily than they have, but time will tell. The Cattle on Feed report was neutral to friendly, with placements being the supportive category of the report. Placements were 92% of a year ago and 2.9% below the average estimate. That will keep the supply of cattle tight through the year. On-feed numbers were right in line with the estimate at 99%. Marketings were at 90% and slightly below the estimate of 90.3%. The offsetting influence to the friendly report was the lower cash trade last week. Northern dressed cattle sold $4.00 lower at $376 while Southern live cattle sold $5.00 lower at $231. Lower cash last week may be the focus this week rather than the Cattle on Feed report. The Commitments of Traders report will be released Monday due to last week's holiday.

Hogs closed higher and remain supported Friday. Pork cutouts jumped $3.16 to average $122.14. This indicates strong demand. The National Daily Direct Afternoon Hog report showed cash down $2.66, which was not surprising. The past two weeks showed strong packer interest on Mondays, and today may not be an exception. The limited slaughter Saturday over the past weeks has seen packers more aggressive on Mondays as they need to maintain hog slaughter to meet demand, but are trying their best to improve their poor margins. Traders will look ahead to the Quarterly Hogs & Pigs report on Thursday.

	BULL SIDE		BEAR SIDE
1)	Placements in May were 8% below a year ago and 2.9% below the average trade estimate. This should support the market.	1)	Last week was the first time in over 2 months that cash cattle traded lower. This may increase the liquidation of cattle futures as more weakness could develop.
2)	Boxed beef prices remain strong as demand has been good. Consumers have not yet backed away from higher-priced beef.	2)	There will be a major boycott of McDonald's by customers from June 24 to 30. This is being organized by the People's Union USA. This could have a negative impact on overall demand this week.
3)	Pork demand is improving, and pork cutout values are increasing. Packers have had to be more aggressive in the cash market.	3)	Hog futures are overbought and could see some liquidation ahead of the Hogs & Pigs report.
4)	Hog numbers may be tightening, causing prices to increase as packers are aggressive with purchases. Cash is expected to be higher Monday.	4)	Chart gaps remain below the market and may be filled at some point.

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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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