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DTN Early Word Livestock Comments      06/16 06:42
   Strong Cash to Support Futures

   Cattle futures extended their gains Tuesday, aided by continued
short-covering, lower grain prices, and a jump of cash cattle prices. It is
unlikely this strength may continue Wednesday, but it has changed the posture
of the market. Hogs may find some stability due to the large jump of cash
Tuesday and a possible end to the liquidation phase.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Steady   Futures: Higher   Live Equiv:   $240.80 -1.63*

   Hogs:  Steady   Futures: Higher   Lean Equiv:  $129.23 -6.17**

   * 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 market can be full of surprises and the price action so far this week
for cattle certainly is a surprise. Not so much in the fact that cash cattle
did not trade lower, but that they actually traded as much as $4.00 higher in
the North and up to $2.00 higher in the South. Packers have enjoyed very good
profit margins for some time and even through boxed beef prices seem to have
established a top, they need cattle and paying more to get them still leaves
exceptional profits. Paying up as much as they have does not seem to indicate
that they are raising bids because they are being nice, but it seems to be more
of a necessity to procure needed supply. A decrease in weights and the
possibility that demand may remain stronger than usual during this time of year
is a positive development. Boxed beef price took a large hit Tuesday with
choice cuts down $1.04 and select cuts down $5.13. This may actually spur
greater demand as less expensive beef may increase consumer interest.
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