DTN Early Word Livestock Comments      12/22 06:10
   Cattle Futures May Gap Higher on the Open

   Cattle futures showed strong gains with feeder cattle leading the way.
However, even with the strength, contracts failed to close the chart gaps ahead
of the Cattle on Feed report. Hog futures closed with minimal gains with mixed
fundamentals.

Robin Schmahl
DTN Contributing Analyst

   Cattle: Lower         Futures: Mixed       Live Equiv: $263.69 +$2.58*

   Hogs: Lower           Futures: Higher      Lean Equiv: $105.58 +$2.33**

   *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:

   Light cash cattle trade was the order of the day and the week. The cattle
that were traded were mixed with Northern dressed cattle $3.00 to $4.00 higher.
Southern live cattle traded $2.00 lower. With this being a holiday-shortened
week, trading activity is expected to be light with packers not needing to
purchase many cattle. The Cattle on Feed report was bullish as the on-feed
numbers were slightly below expectations at 97.9%. Placements were the biggest
surprise at 88.9% versus the average estimates of 92.4%. Marketings were 88.2%
versus the estimate of 88.4%. Placements were the lowest for this report since
the Cattle on Feed series began in 1996. This is the third consecutive report
where placements have been at least 10% lower. The smaller herd, which has
resulted in tighter numbers and the closure of the Mexican border, remains the
primary driver of the market. On-feed numbers remain higher due to packers
running at a slower-than-normal slaughter pace. Although the report is bullish,
it may be factored into the market and could result in a subdued opening. It
will be interesting to see what will develop technically. If futures gap higher
on the open, it will result in a bullish island bottom formation.