DTN Early Word Livestock Comments      05/26 06:16
   Early Follow-Through Selling Expected

   Feeder cattle fell ahead of the report on Friday and rightly so as
placements came in higher than expected. Live cattle held with an already
discounted price to cash. Hog futures closed mixed as traders were not
interested in pressuring the market much further.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Steady          Futures: Lower         Live Equiv: $289.00 -$0.73*

   Hogs: Higher            Futures: Higher        Lean Equiv: $102.80 +$0.71*

   *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:

   Feeder cattle fell significantly on Friday as traders were fearful of the
placement number on the Cattle on Feed report. The trade expectation was for
placements to be 3% higher than a year ago, but the actual was 6% higher. The
question is whether this has been factored in, given the substantial declines
on Thursday and Friday, or whether further long liquidation will occur. Added
to this were higher on-feed numbers. On feed as of May 1 were 2% higher than a
year ago. Reduced slaughter has resulted in feedlots holding onto cattle longer
and feeding them to higher weights. Higher weights mean more beef per animal,
which does not reduce the tonnage of beef available through reduced slaughter.
Marketings in April were 10% below a year ago and should not have much
influence on the market. Follow-through selling is likely, but some of the
bearishness is already factored in. Boxed beef on Friday showed choice down
$1.21 and select down $0.65. The Commitment of Traders report showed fund
traders reducing their net-long live cattle position to 127,747 futures
contracts, down 1,207. Funds increased their long position in feeder cattle by
910 contracts to a total of 18,819. This is as of last Tuesday.