DTN Early Word Livestock Comments 07/27 06:20

DTN Early Word Livestock Comments 07/27 06:20 Traders are Cautiously Optimistic Some follow through is expected in the cattle complex Tuesday, but the strong rally may run into technical resistance as well as higher grain futures again. Hogs may chop around a bit as traders wait for more evidence of higher cash. Robin Schmahl DTN Contributing Analyst Cattle: Higher Futures: Mixed Live Equiv: $199.49 +0.82* Hogs: Higher Futures: Higher Lean Equiv: $129.75 +0.57** * 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: Both live and feeder cattle futures were the beneficiaries of the reports that were released on Friday. Traders did not buy the rumor, sell the fact Monday, but rather bought the fact. The numbers on the reports gave traders confidence that cattle supplies may be tightening over time. The reports and the surge of futures over the past three days may increase the desire of feedlots to hold for higher cash this week. Boxed beef prices have been increasing after seemly finding a bottom for prices with choice cuts up $1.30 and select cuts of $0.98. This may push packers into having to pay up for cattle this week as they need to keep up with demand. The Commitment of Traders report showed funds reducing their long positions by 487 contracts to 54,627 net-long futures positions. Follow-through trading is expected Tuesday, but there may be a limit to the upside until cash activity begins to unfold.