DTN Early Word Livestock Comments      12/03 06:19
   Cattle Futures May See Further Liquidation Tuesday

   Traders decided to liquidate some of their long positions in feeder cattle
after the steep increase, resulting in triple-digit losses Monday. Packers may
not be as aggressive this week because cattle were purchased ahead. Friday's
break in hog futures was viewed as a buying opportunity with contracts
reversing the losses Monday.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Steady        Futures: Mixed       Live Equiv: $224.44 +$1.80*

   Hogs: Higher          Futures: Higher      Lean Equiv: $98.61 +$2.35**

   *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:

   Feeder cattle futures opened higher Monday and made new highs before
reversing and falling back into the close. Some of the selling may have been
due to the market being overbought, but some of it may have stemmed from the
news that Cargill will cut 5% of its workforce over time due to shrinking
profits. Some of those cuts will be to its meat processing division as it has
pressured margins. This may not impact overall beef processing in the nation
but it may have been enough to trigger some selling as traders react to the
news. This does not change the bullish aspect of the cattle herd and tight
supplies. Boxed beef prices were higher with choice up $2.49 and select up
$2.70, indicating continued strong consumer demand. However, traders will be
cautious due to the amount of cattle purchased for deferred delivery last week.
The Commitments of Traders report showed fund traders adding 6,497 long futures
positions in live cattle, bringing their net-long total to 118,350 contracts.
They increased their net-long positions in feeder cattle by 3,036 contracts to
a net-long position of 15,467 contracts.