DTN Early Word Livestock Comments

Cattle: Mixed Futures: Higher Live Equiv: $273.75 -$0.70*

Hogs: Lower Futures: Mixed Lean Equiv: $105.21 +$1.79*

*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:

Last week was a disappointing week for cattle futures as we logged sharp declines with headlines beating up the market nearly every day. Secretary Rollins met with Mexico, clearly in talks about a border reopening plan, but announces she is not comfortable opening the border today. However, her comfort is increasing day by day. The futures prices did not react kindly to that statement. After the market closed Friday, Trump made comments about looking into the foreign-owned meat packers. The market is expected to open higher Monday after the sharp close lower last week. Boxed beef prices were mixed with choice down $0.54 and select up $1.44. Lower cash trade is likely.

Hog futures have been sharply declining to lows not seen since we had a bottom in July. Hog contracts are expected to test those lows, still $1 to $2 away from Friday's close. Support is difficult to find as futures have been rapidly falling apart. The low prices themselves may be what helps find support as we see extra buying at these levels.

	BULL SIDE		BEAR SIDE
1)	December live cattle futures hold a substantial discount to cash, which may limit further losses.	1)	The constant flow of political headlines is enough to keep traders from entering new positions as the volitilty is too much to stomach.
2)	Trump comments about foreign-owned packers being the possible reason prices have been inflated should bring support to start the week.	2)	The momentum of the drop in futures and November feeders and a still wide spread to cash could bring cash down rapidly as we saw last month.
3)	Hog futures are severely oversold and may find support at April lows.	3)	While the July low may provide some support, the spring lows are much lower and prices still have a ways to go to find a bottom from the last year of trade.
4)	Retail demand is still a bullish factor as we head closer to the holiday season. With lower prices, pork is a bargain as a protein source.	4)	Hog supply is high, driving prices lower.

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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