DTN Early Word Livestock Comments 08/03 06:20
Follow-through Buying Expected
It is anticipated live stocks futures could follow through on Tuesday.
Cattle could follow through because of lower grain prices on the overnight
while hogs find support from strong cutouts.
DTN Contributing Analyst
Cattle: Higher Futures: Higher Live Equiv: $208.86 +2.14*
Hogs: Steady Futures: Higher Lean Equiv: $135.52 +4.82**
* 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
Nearby cattle contracts barely closed higher while deferred contracts showed
more strength. There is some anticipation cattle supplies may tighten as the
year progresses. Over the past nearly two months, cattle weights have been
somewhat steady during a time when weights generally increase. Feedlots are
optimistic that they will be able to receive higher prices for their cattle
this week. Boxed beef prices continue to soar with choice cuts up $2.54 and
select cuts up $4.19. Orders for Labor Day are strong with the possibility that
plants will not be able to satisfy all of those orders at currently slaughter
rates. There were a few cattle traded in Nebraska Monday, averaging $197. This
was not enough to sufficiently test the market, but it is likely setting the
stage. The Commitment of Traders report showed funds were net buyers of 11,271
contracts, increasing their net-long positions to 65,898 contracts.
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