DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $277.70 +$1.05*

Hogs: Higher Futures: Higher Lean Equiv: $100.64 +$1.81**

*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 cattle market showed little fundamental direction. Live cattle could not find solid footing to push futures into positive territory. No cash cattle have traded, giving no indication of packer demand. The consensus is that cash may be steady this week. Boxed beef prices were mixed, with choice up $3.20 and select down $3.05. Mixed boxed beef prices have been common recently, keeping traders cautious. Packers will not be anxious to buy aggressively as it is a holiday-shortened week; they have some cattle purchased ahead and margins have improved.

Hog futures continued their choppiness, but have maintained a slightly higher bias. All contracts closed lower, but the December and later contracts closed near the day's highs. The National Daily Direct Afternoon Hog report showed a gain of $.90 with a weighted average price of $87.25. Pork cutout values increased by $1.81. Hog slaughter remains strong, and hog weights are down. The weekly average was 283.4 pounds, down 2.8 pounds. The lower hog numbers that had been anticipated over some time may now be showing up as packers have been pulling hogs forward to maintain the slaughter pace. This should provide support to the market.

	BULL SIDE		BEAR SIDE
1)	Cash cattle traded is expected to be no worse than steady this week. This should provide support to futures.	1)	Cash cattle may trade steady at best this week as packers may not need to be aggressive due to having cattle purchased ahead.
2)	Feeder cattle futures posted higher highs and higher lows on Wednesday, maintaining the recent uptrend.	2)	Traders remain cautious with the uncertainty over the impact of 300,000 metric tons (mt) of beef imports and what will be the outcome of the attempt to block it.
3)	Weekly hog weights declined 2.8 pounds to average 283.4 pounds. This is 2.9 pounds below a year ago. This is the largest weekly decline seen in some time.	3)	Both cash and cutout prices have difficulty finding consistent support. This may keep the upside price potential limited.
4)	Packers should be aggressive again Thursday, as they may want to take care of most of their hog purchases for the week.	4)	Even though hog weights have declined, packers continue to have sufficient market-ready hogs available.

For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CDT. 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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