DTN Early Word Livestock Comments      02/02 06:12
   Traders Are Expected to Support the Cattle Market

   Livestock futures drifted lower into the weekend. Traders were not sure of
the cash trade by the close of the market, nor what the Cattle Inventory report
was to show. Hog traders could not find anything solid to stimulate buying
interest.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Higher          Futures: Higher     Live Equiv: $268.88 -$0.78*

   Hogs: Higher             Futures: Mixed     Lean Equiv: $100.00 +$0.79**

   *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 traders were desperately looking for something to cause them to hold
positions through the end of the month. The uncertainty of cash trade and the
biannual Cattle Inventory report left them taking some profits ahead of the
weekend. Cash cattle trade developed late, with Southern live prices trading as
much as $5.00 higher, while Northern dressed cattle traded as much as $9.00
higher. That should provide support to begin the month. Packers were
short-bought and should remain aggressive due to tight cattle supplies. The
biannual Cattle Inventory report was not bearish to the market, showing all
cattle and calves down slightly from a year earlier at 86.2 million head. Cows
and heifers that have calved totaled 37.2 million, also down slightly from a
year earlier. Beef replacement heifers totaled 4.71 million head, 1% above a
year earlier, but that will not hurt the market. The calf crop was 2% lower at
32.9 million head. Boxed beef prices were mixed on Friday, with choice down
$2.10 and select up $1.22. The Commitment of Traders report showed the fund
traders adding 2,928 live cattle futures positions, increasing their long
positions to 104,399. They added 1,460 long positions to feeder cattle,
bringing their net-long position to 18,865 contracts.