DTN Early Word Livestock Comments 08/23 06:25

DTN Early Word Livestock Comments 08/23 06:25 Futures Expected to Open Higher Cattle futures outdid themselves Friday in light of the Cattle on Feed report released after the close of trading. There was anticipation of a friendly report which caused some short-covering into the close. Hog futures rallied despite underlying cash. Robin Schmahl DTN Contributing Analyst Cattle: Steady Futures: Higher Live Equiv: $252.93 +$2.14* Hogs: Steady Futures: Lower Lean Equiv: $126.81 -$2.06** * 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 expectation of a friendly Cattle on Feed report was well founded as the report met that expectation overall. The on-feed number was 98% with trade expectations of 98.3%, which should provide some support. Placements of 92% compared to last year and expectations of 93.2% also should provide support as they indicate supplies should tighten as the year progresses. However, marketings were 95% of a year ago compared to expectations of 96.5%. This is viewed as a bit bearish as lower marketings could mean near-term supplies are plentiful. Bear in mind the actual is compared to estimates from which we determine the report is either bullish or bearish. The bottom line is all numbers are below a year ago which can be considered friendly. The larger issue remains of the disparity between cash and beef prices. Cash cattle were $1 to $2 higher last week while boxed beef prices soared. On Friday, choice cuts jumped $3.43 while select cuts gained $2.12. Futures should extend gains Monday, but bear in mind, the price increases Friday may have already factored in the report.