DTN Early Word Livestock Comments      07/11 06:25
   Cash Cattle Trade Will Set Market Direction

   Cattle futures were a case study in volatility on Thursday. A higher opening
and sharply higher trade ran its course with futures falling back substantially
after new contract highs. Hog futures tried to build on recent minor support
but were unable to hold gains.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Lower         Futures: Lower       Live Equiv: $280.17 -$1.40*

   Hogs: Lower          Futures: Mixed          Lean Equiv: $120.07 +$2.09**

   *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:

   The cattle markets opened higher on Thursday in response to the news that
the U.S./Mexico border is closed for cattle again and the announcement of a 50%
tariff on Brazilian imports starting Aug. 1, unless certain demands are met by
then. Brazil is the No. 1 exporter of beef to the U.S., and a slowing of beef
exports would be bullish for beef prices. However, traders took profits,
resulting in early buyers being forced out of the market as stops were
triggered. Cattle futures at these lofty levels will show increased volatility
based on the news that is released, and higher daily trading limits can enhance
this volatility. The frightening thing is that it may not be a matter of if,
but a matter of when the New World screwworm will be discovered in the U.S. If
it is, the market may experience substantial liquidation. Cash cattle have not
traded so far, but lower cash seems likely due to the recent weakness of boxed
beef. Boxed beef prices on Thursday showed choice down $1.79 and select down
$2.41.