DTN Early Word Livestock Comments 05/03 06:22

DTN Early Word Livestock Comments 05/03 06:22 Support for Livestock Futures Expected The June live cattle contract is now front-month and is carrying a discount to cash. That is not a good situation as traders are expecting further erosion of cash. Hogs are in a very strong position as futures are trending higher and supplies are getting tighter. Robin Schmahl DTN Contributing Analyst Cattle: Steady Futures: Mixed Live Equiv: $218.31 +2.04* Hogs: Higher Futures: Higher Lean Equiv: $117.07 +2.94** * 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: The April live cattle contract is now history and it finished trading with a bang, falling to $116.00. June is now front month and is only slightly higher than where April finished, indicating that the trade does not expect stronger cash prices in the near term. June futures were able to close higher for the week but have carved out a definite sideways trading range. Grain futures trading limits are expanded as of the beginning of this week in anticipation of greater volatility this summer. Higher grain prices will have substantial impact on cattle prices. This we have already seen. Feedlots were willing to move cattle at lower prices in order to reduce feed consumption. Boxed beef prices closed significantly higher, which will keep packers anxious to purchase cattle this week to keep chain speed high to meet demand. However, packers have not had to bid up to get sufficient supply and they have had the benefit of the grain markets on their side.