DTN Early Word Livestock Comments

Cattle: Lower Futures: Lower Live Equiv: $269.89 +$0.30*

Hogs: Higher Futures: Higher Lean Equiv: $103.12 -$0.21*

*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:

Traders gained some confidence on Monday to buy into the contracts with feeder cattle leading the charge. Futures bouncing from technical support on Friday increased the interest of traders to buy into the market. However, the recent volatility may be moving traders to take short-term positions rather than buying and holding. It may be difficult for futures to regain the losses of the past month as market fundamentals and perceptions have changed. The weakness of cash cattle prices recently is expected to continue this week as we move closer to Thanksgiving. Traders will also be cautious over the Cattle on Feed report that will be released on Friday. Boxed beef prices were mixed on Monday, with choice down $0.32 and select up $2.06.

Hog futures are trying to rebuild support, but the best we may hope for in the near term is stability. Cash showed minor strength on Monday as packers took advantage of the lower prices to purchase hogs. The National Daily Direct Afternoon report showed a gain of $0.30 on rather light trade volume. Higher cash may continue as packers should be more aggressive Tuesday. Pork cutouts were down $0.21, making it difficult for traders to get excited over a strong upside potential for prices. Futures may recover some of the losses of last week, but the rebound might be limited.

	BULL SIDE		BEAR SIDE
1)	Cattle futures held technical support, which may provide confidence for traders to buy into the market.	1)	Cash cattle are expected to trade lower again this week as packers have purchased cattle for deferred delivery and will do so again this week.
2)	Chart gaps remain above the market, which may be filled at some point before the contracts expire.	2)	The upcoming Cattle on Feed report may limit trader buying interest for the rest of the week.
3)	Hogs futures might regain some of the losses seen last week as contacts held support.	3)	The fundamentals of the hog market are not very supportive, leaving traders limited in their interest to buy and hold contracts.
4)	Packers may be more aggressive Tuesday as they need to purchase hogs for the week and possibly purchase ahead for the week of Thanksgiving.	4)	Packers may slow the slaughter pace moving through Thanksgiving and the end of the month.

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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