DTN Early Word Livestock Comments 03/25 06:17
Cattle Futures May Have Limited Downside Potential

Cattle futures opened higher Monday, reacting to the bullish Cattle on Feed
report, but follow-through buying did not materialize resulting in the futures
falling back. Hog futures were disappointing as the gains on Friday did not
carry through. Traders remain skeptical over demand.

Robin Schmahl
DTN Contributing Analyst

Cattle: Steady Futures: Higher Live Equiv: $239.37 +$1.65*

Hogs: Higher Futures: Mixed Lean Equiv: $103.15 +0.51**

*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:

Cattle did not capitalize on the bullish Cattle on Feed report Monday,
making it a a classic buy-the-rumor, sell-the-fact scenario. The weakness on
Monday does not mean the top is in, as the April contract is holding a discount
to cash and cash is expected to be no worse than steady this week. Packers were
able to purchase a significant amount of cattle last week, but the amount for
deferred delivery was light, which may mean they will need to be aggressive
this week to buy what they need. Boxed beef prices were higher with choice up
$1.65 and select up $3.96. Demand is holding even at the higher beef prices.
Packers will not be aggressive early in the week but will wait to see if
feedlots will offer more cattle this week before placing bids. Feeder cattle
futures closed with minimal losses after opening significantly higher. Feeder
cattle demand remains strong with higher prices being paid.