DTN Early Word Livestock Comments      05/03 06:17

   Further Strength Likely in Cattle Friday

   Cattle futures received positive news from numerous avenues Thursday, 
pushing contracts higher. Maybe traders can put the avian flu concerns behind 
them for now. Hog futures struggled throughout Thursday, resulting in a mixed 
close. 

Robin Schmahl
DTN Contributing Analyst

   Cattle: Higher          Futures: Higher   Live Equiv:   $216.91 -$0.39*

   Hogs: Higher           Futures: Mixed   Lean Equiv:   $103.70 -$0.11**

   *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 had a strong open and higher trade throughout Thursday. Initial 
support came from good beef exports totaling 22,500 metric tons (mt), which was 
a marketing year high. Then there was the announcement that no avian flu matter 
was found in ground beef that had been tested. On top of that, cash cattle 
began trading $1.00 to $2.00 higher. What was there not to like about the 
fundamental news? Traders supported the market aggressively, but maybe not as 
aggressively as one would have thought based on not finding traces of avian flu 
in ground beef. There remains the matter of consumer perception and whether 
this will put the concern of the avian flu in beef behind us. It certainly is a 
step in the right direction. The weakness of boxed beef remains a concern with 
choice down $0.64 and select down $0.09.

   Hog traders were uncertain of what to do with the market Thursday. Pork 
export sales were good at 33,600 mt, but that was unable to trigger aggressive 
buying. The National Direct Afternoon Hog report showed cash down $0.24 as 
packers seem to have purchased the hogs needed for the week. However, possibly 
they could be more aggressive Friday if they need to make some final purchases 
for the week. This has happened numerous times. Cutouts were under pressure 
with values down $0.11. Futures may see strength Friday ahead of the weekend as 
traders may liquidate recent short positions.

   BULL SIDE                               BEAR SIDE
   No traces of avian flu were found in    It was somewhat disappointing that
   samples of ground beef that were        cattle futures did not rally more
1) tested, taking that bearishness off  1) than they did based on the positive
   the table for now.                      news of the ground beef testing
                                           negative for bird flu.

   Live cattle futures have chart gaps
   above the market that may be filled     Boxed beef continues to struggle,
2) Friday or at least soon. Higher cash 2) indicating weakness in demand. This
   cattle may provide the support to       may limit upside price potential.
   accomplish it.

   Hog traders may liquidate their         The packers may not be looking for
   short positions before the weekend      hogs aggressively anymore this week,
3) as good exports and the recent       3) which may mean lower cash.
   decline may trigger short covering.

   The packers maintain a strong           Hog weights averaged 287.1 pounds
   slaughter pace and hog weights only     last week, up 1.2 pounds from a year
4) increased by 0.1 pound from the      4) ago.
   previous week.


   For our next livestock update, please visit our Midday Livestock comments 
between 11 a.m. and noon CST. 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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