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Early morning livestock comment

Agriculture.com Staff 07/24/2006 @ 7:22am

Cattle traded on Friday at $80.00 live and $126 dressed in the north, with the south trading $79.00-$79.50 live. Fed cattle trade got going so late on Friday that was hard to get a handle on volume, though initial reports indicated packers were not very aggressive and showlists are expected to be unchanged to larger this week.

Beef buyers will try to pressure the cutout this week after packers bought cattle cheaper on Friday. Buyers will also note the bearish COF report and the large quantity of freezer stocks shown in the Cold Storage Report. The decline may be less steep than in the past two weeks, however; the cutout lost $6.00 last week and over $5.00 the previous week.

The Cattle on Feed Report showed much larger placements than expected with the actual for June up 10%. In addition, placements were concentrated in the north; large numbers in the north tend to be more bearish than large numbers in the south. The only saving grace was that placements were concentrated in the lighter weight groups, which will spread marketings out over a wider time frame. Placements in the 700 lb and up categories were actually down from last year.

Japanese beef inspectors have finished their tour of U.S. beef plants, reportedly without finding anything that would hinder resumption of U.S beef imports. There are expectations that the announcement of resumed imports may come on Thursday.

Interior hog markets called steady to lower this morning after packers were able to book good numbers ahead last week. Hog numbers have really turned around in the past few weeks and slaughter was up 5.4% last week, at 1.969 mil head. This is a huge slaughter for this time of year and the large production is expected to pressure pork again this week.

The increase in slaughter has had a negative effect on product values. Bone-in 1/4" trim loins are down 17 cents from the first of the month. Bellies have declined 19 cents and appear to have additional downside. Even hams, which have enjoyed strong export demand, are back down into the mid 60's, though we hear that same export demand should begin to support this market around these levels once again.

The Cold Storage Report did not hold much good news for bellies. The report showed larger belly stocks than expected at the end of June. Stocks totaled 52.508 mill lbs compared to expectations that ranged 47.7-52.0 mill lbs. Stocks do remain well below last year's 70.657 mill lbs and were down from the 64.857 at the end of May.

For more information or trading ideas about this market, Please contact us at (877)787-6278 or email us at sales@linngroup.com.

Cattle traded on Friday at $80.00 live and $126 dressed in the north, with the south trading $79.00-$79.50 live. Fed cattle trade got going so late on Friday that was hard to get a handle on volume, though initial reports indicated packers were not very aggressive and showlists are expected to be unchanged to larger this week.

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