DTN Early Word Livestock Comments      07/02 06:13
   Lower Cash Cattle Trade to Continue Thursday

   Cattle futures made a valiant effort to trade higher, but could not hold the
gains. The nearby August contract made a lower high and higher low despite the
large discount to cash. Traders continue to trade spreads, with bear-spreading
taking place on Wednesday.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Lower           Futures: Higher      Live Equiv: $285.68 -$1.30*

   Hogs:   Lower           Futures: Higher      Lean Equiv: $102.21 +$0.22**

   *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:

   Cattle futures tried to regain a foothold Wednesday, making a valiant effort
to regain some of the recent losses. Although the October and later live cattle
contracts closed slightly higher, the nearby August closed lower, resulting in
a lower high and lower low. Even though the August carries a substantial
discount to cash, traders have been unwilling to support the contracts, being
concerned about the strength of cash over the next two months. We know supplies
are tight, but the market is driven by demand. Cash cattle trade on Wednesday
showed Southern live cattle $3.00 lower and Northern dressed cattle $5.00
lower. This may keep traders cautious about becoming exuberant with buying.
Boxed beef prices were lower, with choice down $1.90 and select down $1.99.
Feeder cattle showed greater weakness as traders are uncertain over near-term
prices.