DTN Early Word Livestock Comments      05/11 06:14
   Price Support May Remain Elusive

   Even though cash traded higher last week with another new record high, the
futures did not respond favorably on Friday. In fact, they were lower for the
week. Hog futures fared better with limited losses despite struggling
fundamentals.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Steady          Futures: Higher      Live Equiv: $287.51 +$0.84*

   Hogs: Lower            Futures: Higher      Lean Equiv: $103.98 +$2.06**

   *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:

   Cash cattle traded developed on Thursday and carried through the end of the
week, posting prices from $2.00 to $4.00 higher. This resulted in another week
of record-high cash. However, the futures did not follow suit as both live
cattle lost about $4.00 and feeder cattle futures were almost $8.00 lower. This
would give the impression that the market may be tired, with traders willing to
reduce their long positions on the possibility that these prices will impact
demand. So far, that has not been a reality as choice boxed beef was up $1.45
at $388.39 and select was up $0.59 at $385.01. Some time ago, boxed beef prices
were over $400 when cash cattle prices were lower. This indicates how much
packers are running at a loss. This may not be sustainable over the long term.
Feeder cattle remain in strong demand in the country as feedlots are paying a
premium over the market in many cases. The Commitment of Traders report showed
fund traders added 6,458 live cattle futures, bringing their net-long positions
to 138,018. They added 1,913 long futures to feeder cattle, increasing their
long positions to 20,521.