DTN Early Word Livestock Comments      01/24 05:52
   Cattle Expected Lower Monday

   Cattle traders became cautious over just what the Cattle on Feed report
would show and decided to lighten up on some long positions just in case. Well,
that was the right thing to do, as the report was bearish. Hog traders
certainly are not being influenced by cattle futures as traders are bullish on
the market.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Lower. Futures: Lower. Live Equiv: $218.34 -$0.25*

   Hogs: Steady. Futures: Mixed. Lean Equiv: $100.43 +1.24**

   *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:

   The Cattle on Feed report was bearish all the way around. On feed numbers
were 1% higher than a year ago and above expectation for slightly lower
numbers. Placements were significantly bearish as 6% more cattle were placed in
feedlots in December than a year ago. This was over 4% more than the average
trade estimate. Marketings were even with last year but about 1% below the
trade estimate. This has been the subject of much discussion over the weekend
with some disbelief as to the numbers but also some ideas as to why placements
were large. Either way you look at it, there are more cattle on feed and placed
in feedlots than expected. These cattle will need to be worked through the
system. This may be a tall order in the near term as slaughter pace remains
lower than desired. This has not likely already been factored in the market
leaving it vulnerable to further liquidation. Beef exports sales were an
improvement at 12,800 mt but may not be enough to offset the implications of
the report. Boxed beef took a breather Friday with choice down $0.57 while
select gained $0.15. Futures are expected to struggle to begin the week.