DTN Early Word Livestock Comments

Cattle: Higher Futures: Higher Live Equiv: $280.52 -$0.76*

Hogs: Lower Futures: Mixed Lean Equiv: $91.95 -$2.82**

*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 found some support as a few dressed cattle sales took place at steady money with last week. That has been the early consensus, but it has not been enough to establish a trend for the week. There is anticipation that higher prices will develop. The slaughter pace has returned back to normal this week after the disruption last week. Boxed beef prices did not follow through with gains on Wednesday. Choice boxed beef increased $0.13 while select boxed beef declined $3.89. Live cattle futures are holding support in a sideways range, while feeder cattle continue their uptrend. The technical action in feeder cattle futures on Wednesday points to higher prices as the market may be on its way to fulfilling a head and shoulders bottom.

Hog futures held well on Wednesday, but remain unable to find consistent supportive fundamentals. Both cash and cutouts were lower again. The National Daily Direct Afternoon Hog report showed cash down $1.02. Packers may not need to be aggressive for the rest of this week due to a substantial number of hogs having already been purchased. Pork cutout values declined $2.82 with lower prices in all categories. Hog weights increased significantly from the previous week, averaging 289.2 pounds.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures are holding support while feeder cattle develop an uptrend. There is optimism over steady to higher cash this week.	1)	Live cattle futures have been moving in a sideways pattern, unable to find sufficient support to develop an uptrend.
2)	Feeder cattle futures moved above the neckline of the head and shoulders pattern. This may increase interest from technical traders to buy into the market.	2)	Live cattle futures hold a discount to cash in the anticipation that price weakness may develop before the end of the month.
3)	Hog futures are holding above the recent lows and may be building support.	3)	Weekly hog weights increased by 2.3 pounds from the previous week, averaging 289.2 pounds. This is 1.3 pounds higher than a year ago.
4)	Hog slaughter remains strong and should keep hogs current. It also indicates demand is good as pork is moving.	4)	There are a lot of market-ready hogs available, leaving packers less aggressive in the cash market.

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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