DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $274.62 -$0.91*

Hogs: Lower Futures: Lower Lean Equiv: $86.57 -$2.07**

*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 market awaits the October WASDE report to be released at 11 a.m. CDT. For beef, we saw an increase in imports between the August and September report. The market is expecting this to continue to climb as efforts persist to increase beef imports in a government effort to lower the cost of beef. Cash trade picked up demand some on Thursday after a light start to the week. Negotiated live purchases were steady to $2.00 lower with dressed purchases steady to $5.00 lower.

The lean hog futures contracts had another disappointing day on Thursday. Cutout values were down $2.07 while the Daily Direct Hog Report was up slightly at an average weighted price of $72.51. Slaughter numbers are strong, meaning pork demand needs to ramp up for further market support. Friday's WASDE could be the important piece of the puzzle to determine where the market goes into next week.

	BULL SIDE		BEAR SIDE
1)	Long term, tight cattle supply numbers will be difficult to change, giving support to the market for the foreseeable future.	1)	The WASDE report's import numbers for beef are expected to increase, adding to domestic supply.
2)	Cash prices for cattle have been resilient over the last couple of years despite futures volatility, showing the market is optimistic for long-term potential.	2)	Wholesale beef prices are falling, limiting futures momentum.
3)	Pork exports exceeded new sales, giving hope for shipments to remain strong going forward.	3)	Pork cutouts have dropped quickly this week, weighing heavily on futures markets.
4)	Cash hog prices were slightly higher on Thursday. If this continues, the futures market could follow suit.	4)	Federally inspected hog slaughter numbers were well above both last week's numbers as well as last year's numbers. High slaughter volumes pressure markets with a surge in pork supply.

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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