DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $191.18 -$0.52*

Hogs: Steady Futures: Mixed Lean Equiv: $112.15 -$1.55**

*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:

Live cattle declined despite lower corn futures Friday. Cattle contracts eliminated the gains of earlier in the week, closing near the levels of a week earlier. Cash trade was mainly finished for the week with steady prices. Packers were able to acquire the cattle they needed last week and were also able to purchase some for the following two weeks. That may leave them less aggressive again this week. Boxed beef prices were lower with choice down $0.74 and select down $0.75, which also leaves a negative tone to the market. Higher food prices may have consumers backing away from higher priced cuts of beef. DOW futures posted significant losses again overnight, indicating more pressure may be put on the economy. Feeder cattle may find further support due to significant losses in corn futures overnight with those losses carrying over Monday. There was stronger demand for feeder steers and heifers last week.

Hog futures fell back on the combination of weaker cash and weaker cutouts. Cash on the National Direct Afternoon report was down $1.59 with cutouts down $1.57. There had been hope that cutouts had found a bottom, but that may not be the case. African swine fever has been confirmed in Rome, which may have also had a negative impact on the market due to the fact that it had spread to another country. However, it may not have a lasting impact on the market if it is contained and no further outbreaks are reported. Slaughter pace is increasing as packers are able to obtain hogs and prepare for a seasonally higher demand period.

	BULL SIDE		BEAR SIDE
1)	Corn futures are significantly lower overnight, which should provide some support to cattle.	1)	Even steady cash cattle and lower corn prices could not support futures last week. Live cattle futures eliminated the gains of the week.
2)	June live cattle have a large discount to cash, which should limit the downside and provide support.	2)	With some cattle already on the books for a few weeks out, packers may not be aggressive this week.
3)	A seasonal increase in pork demand should take place as consumers spend more time grilling out.	3)	Pork cutouts have yet to find solid support. Just when it looks like seasonal demand may improve, outside influences put pressure on the market.
4)	Hog slaughter is picking up, indicating demand is improving as consumers see value in the price of pork in the grocery stores.	4)	Exports of pork for the month of March totaled 544.17 million pounds, down 23% from March 2021. China was not a strong buyer during the 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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