DTN Early Word Livestock Comments 10/11 06:04

DTN Early Word Livestock Comments 10/11 06:04 High Feed Prices Are Not Going Away Strong corn prices had a negative effect on cattle with feeder cattle showing the greatest pressure. Feedlots hope for higher cash, but substantially lower packer margins may have an impact. Hogs diverged between nearby and differed contracts as spread trading dominated the day. Robin Schmahl DTN Contributing Analyst Cattle: Steady Futures: Mixed Live Equiv $180.01 -$1.84* Hogs: Lower Futures: Mixed Lean Equiv: $109.16 -$0.15** * based on formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. 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: Corn futures gained substantially over a number of reasons. The fact is that December corn closed at the highest level since June 21st. This put pressure on the cattle complex as feed prices are not backing off as anticipated during harvest. The possibility of a rail strike came back to the forefront. This will increase the uncertainty over feed supplies to certain areas of the country which could increase corn prices and result in more cattle liquidation. Packer margins are very much lower than last year and the 3-year average which may result in packers taking steps to improve those margins. Boxed beef was lower yesterday with choice down $1.44 and select down $2.31. The Commitment of Traders report showed funds as net seller of 19,139 contracts reducing their net long positions to 42,936 contracts.