DTN Early Word Livestock Comments 02/07 06:15

DTN Early Word Livestock Comments 02/07 06:15 Higher Cash Expectations Cattle futures closed higher for the week last week. Feedlots have their sights set for higher cash this week. Slaughter is expected to increase again, which should increase packers' need to obtain cattle. Hog futures continue to reach higher with little indication of price resistance. Robin Schmahl DTN Contributing Analyst Cattle: Higher Futures: Mixed Live Equiv: $209.55 -$1.80* Hogs: Higher Futures: Higher Lean Equiv: $104.60 +$0.30** *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: Cattle futures showed some impressive strength last week. Cattle movement was lighter due to the winter storm, which impacted slaughter pace. Cash was able to increase $4.00 as packers were aggressively looking for cattle. Feedlots will set higher offers in the hopes packers will need current supply as well as attempt to purchase ahead for the following week or two. It will be an interesting week that will test the resolve of both packers and feedlots. Cash business in not likely to take place early as feedlots have set their sights higher and will hold. Packers are in a quandary as they need cattle to process while at the same time boxed beef prices continue to weaken. Choice declined $1.65 on Friday while select declined $0.42. The choice/select spread continues to move closer together with last week showing choice cuts down $6.92 while select cuts declined $.92 bringing the spread to $3.76.