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DTN Early Word Livestock Comments 05/10 06:25
Lower Grain Futures May Provide Support
There may be little to get traders excited about in the cattle markets to
begin the week. However, a futures base has been built over the past two weeks
which may provide solid support. It is difficult to say which way hogs will go
Monday. The weakness in closer months might be short-lived if the pattern of
the past few months remains intact.
Robin Schmahl
DTN Contributing Analyst
Cattle: Steady Futures: Mixed Live Equiv: $224.59 +$0.16*
Hogs: Higher Futures: Mixed Lean Equiv: $120.38 -0.09**
* based on formula estimating live cattle equivalent of gross packer
revenue. (The Live Cattle Equiv. 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 have a lot of head wind to move against to begin the week. Traders
will have no bids or offers in the cash market to provide any direction. The
failed action of futures on Friday also may keep a negative tone in the market.
What looked like strong follow-through from Thursday, ran out of buyer interest
and fell back. There was nothing to go on in the cash market as business had
mostly been accomplished for the week. Boxed beef prices moved substantially
higher, but that did not translate to cash prices. I hate to say it, but much
of the same may be in store for this week. You can be assured packers are not
going to look at higher boxed beef prices and strong demand and decide to bid
significantly higher this week just to be nice. They have some cattle purchased
ahead and will see no need to throw out bids early. This week will test the
resolve of feedlots. However, lower grain futures may relieve some pressure.
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