DTN Early Word Livestock Comments

Cattle: Steady. Futures: Higher. Live Equiv: $202.84 +$0.80*

Hogs: Higher. Futures: Higher. Lean Equiv: $114.15 +$3.48**

*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:

There was not a lot of excitement generated in live cattle futures as they opened with minor losses but then traded in positive territory for much of the day. The large movement took place in feeder cattle as the market dumped on the opening but slowly found footing and climbed higher into the close. It may not be so much that feeder cattle found solid support with

April and May contracts falling to the lowest levels since late May and early June 2021, but more information of the significant snowstorm moving across cattle country caused the turn. That, plus weakness of corn futures added to the strength. However, with corn remaining at 2% planted, unchanged from the previous week, corn was up significantly again overnight. Boxed beef was mixed with choice up $1.64 and select down $0.04. The Commitment of Traders showed funds as net sellers of 11,500 contracts bring their net long positions to 40,264 contracts.

April hogs closed lower as they needed to remain in line with cash as they finish trading on Thursday. The other contracts managed double-digit gains as cutouts looked better and cash was somewhat steady. The National Direct Afternoon Hog report showed a decrease of $0.03. Strength came from the increase in cutouts of $3.48. After last week's lower values, this may signal an increase in consumer demand due to the end of Lent this week. Packers may need to be more aggressive to procure the hogs they need for a return of strong consumer demand. The Commitment of Traders report showed funds were net sellers of 11,382 contracts bringing their net longs positions to 57,749 contracts.

	BULL SIDE		BEAR SIDE
1)	The strong rebound of feeder cattle from initial steep losses was positive and may potentially increase the desire of traders to buy into the market.	1)	Higher corn price based on no change in planting progress last week and little expected again this week, may resume pressure on the cattle complex.
2)	The large storm moving across cattle country will create some hardships and impact cattle well-being and hinder movement. There are also a lot of calves on the ground which a concern.	2)	A weather event generally does not have lasting impact on the market. The initial knee-jerk reaction fades as the storm passes even though there is hardship during that period.
3)	Pork demand may begin to increase again, requiring packers to be more aggressive in the near term.	3)	Packers still have not been aggressive and may not be the rest of this week as they have a sufficient supply of hogs available.
4)	Hog futures seem to be building support with a week of sideways trading activity in closer month while trending higher in later months.	4)	May hog futures have a substantial premium to cash and will become the lead month next week. That may be a tall order to fill over the next month.

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For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.

Robin Schmahl can be reached at rschmahl@agdairy.com

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