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DTN Early Word Opening Livestock       12/06 06:31
   Firming Cash Cattle Trade Supports Cattle Futures

   Cash cattle trade has started for the week, but increased volume is expected
to develop Friday. The upward momentum, which continues through the week, is
expected to add support to the entire cattle complex.

By Rick Kment
DTN Analyst


Cattle: Higher             Futures: Higher   Live Equiv $146.80 -1.07*
Hogs:   Steady to higher   Futures: Mixed    Lean Equiv $ 86.33 +0.36**

*  based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

   Light-to-moderate trade developed in the South with live cattle selling at
$118 to $119 per cwt, mostly $119 per cwt. This is generally a $1 per cwt rally
from week-ago levels with underlying support in the cash cattle trade as
packers continue to move to a more normal packer schedule. With Tyson's Kansas
plant now partially back online and ramping up production to normal capacity
over the near future, the need to gain access to additional cattle will likely
bring support to cash cattle trade. Although packer margins have eroded over
the last week, they still remain impressive and should keep packers running at
full throttle in order to take advantage of current margins. Additional cash
cattle trade is needed, especially in the North, with packers only showing
moderate interest up to this point, but the expectation is that prices will
need to be steady to $2 per cwt higher in order to get needed business done.
Futures trade is expected mixed-to-moderately higher as follow-through support
from Thursday's gains is expected to slowly move into the complex at the end of
the week. Friday slaughter runs are expected at 119,000 head.
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