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DTN Early Word Livestock Comments      05/05 06:15
   Cattle Unable to Find Support

   There will likely be follow-through pressure in cattle futures due to
renewed liquidation Tuesday. Grain prices continue to increase. Pork is in
demand with packers remaining aggressive. That may not change anytime soon.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Steady   Futures: Mixed       Live Equiv:    $220.88 +$0.98*

   Hogs: Higher     Futures: Higher      Lean Equiv:    $117.79 +$0.48**

   * 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 fell out of bed Tuesday led by the sharp decline of feeder
cattle. As has been the case the past few weeks, cattle traded early with cash
cattle moving at $118 to $119 while dressed prices were $190 to $191 and steady
with last week. But steady prices just cannot cut it with rising feed prices.
Processor margins are around $700 per head as boxed beef prices continue to
increase. High grain prices continue to push cattle producers into selling
aggressively and even at lower weights to limit feed consumption. Packers
continue to use this to their advantage, as feedlots are anxious to move
cattle. The continued decline of futures is encouraging the liquidation as
feedlots see lowering price potential. June cattle futures had been
establishing a sideways trading pattern, but support was penetrated Tuesday.
The market is oversold, but that is meaningless in this market environment.
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