DTN Early Word Livestock Comments      06/02 06:19
   Expanded Trading Limits Take Effect

   Cattle futures could not hold onto their early gains Friday, succumbing to
selling ahead of the weekend despite higher cash trade. Feeder cattle closed
their chart gaps. Hogs had a strong day with traders focusing on the strength
of cutouts for the week.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Steady         Futures: Higher       Live Equiv: $267.62 +$0.76*

   Hogs: Lower             Futures: Higher     Lean Equiv: $113.04 +$2.60**

   *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 lost ground last week with futures prices lower than the
previous week's close. That is not as bad as it seems, as the beginning of last
week had quite a bit of volatility from the false rumor of the New World
screwworm in the U.S. However, it did show the possibility of what could take
place if there were a negative unforeseen event that could impact the market.
New trading limits will go into effect Monday, June 2. Live cattle will
increase from $6.50 to $7.25, and feeders will increase from $8.25 to $9.25. I
think Tuesday's trade was a glimpse of what the markets will do if we were
actually to get a negative headline that sticks. Expanded limits will be $10.75
for live cattle and $13.75 for feeders. For the week, Southern live cattle
traded $2.00 to $3.00 higher, with Northern dressed cattle $6.00 to $8.00
higher. Boxed beef was higher with choice up $0.25 and select up $3.01,
continuing the trend of record prices. The Commitments of Traders report showed
fund traders reducing their position in live cattle by 2,386 contracts to a
net-long of 123,651. They sold 661 long positions in feeder cattle, reducing
their net-long position to 32,139 contracts.