DTN Early Word Livestock Comments

		Futures	Equiv
Cattle:	Steady	Lower	Live	$269.31	-$1.22	*
Hogs:	Steady	Higher	Lean	$76.87	-$0.59	**

*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:

Cattle markets were ugly Friday. Many of the feeder cattle contracts were trading over $10 lower and the majority of the futures months for live cattle contracts were over $5 lower. Traders had expected some setback from technical selling but not to the degree that the market fell apart. It is speculated that month-end selling was the accelerator. Cash markets were weaker late last week as it seems like packers are having no problems finding cattle available to buy. There is some speculation that the fed cattle numbers ready for slaughter are temporarily inflated, but once pass this short window, will become scarce again.

Lean hog futures traded lower Friday, closing out the week over $7 lower on the December contract. The market is feeling the pressure with pork cutout values sinking lower as well as the availability of hogs being abundant. With heavier hog weights, it is easy to assume that barns are backed up with more hogs ready for slaughter. Last week, the government announced they would be buying $41 million worth of pork to help feed families in need. On the Commitments of Traders report, managed money sold another 4,833 contracts, now short a new record of 51,646 contracts.

	BULL SIDE		BEAR SIDE
1)	The Cattle on Feed report was bullish in October and fundamentally will support the market.	1)	December live cattle futures broke through support with Friday's sell-off.
2)	The Feeder Cattle Index is still holding strong, ignoring futures volatility.	2)	Cash prices are lower for cattle in the North, on top of lower boxed values.
3)	A $41 million pledge from USDA to buy pork will help boost the market.	3)	Record net short for managed money of 51,646 contracts set last week.
4)	Holidays are around the corner, and with that, new demand for pork products.	4)	Pork cutout values continue to fall.

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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