DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $197.51 -$0.12*

Hogs: Steady Futures: Higher Lean Equiv: $122.65 +$3.64**

*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 closed higher Friday, moving into the three-day weekend. The gains were moderate due to much of the cash business having been taken care of at a surprising $4.00 higher than the previous week for both the North and South. Feedlots have their sights set on higher cash this week as packers should be looking for cattle aggressively again. Slaughter pace has been strong, leaving packers with less bargaining power, along with looking at a tighter supply. The other side of the market is the concern over continued strong demand. Boxed beef prices were mixed Friday with choice down $0.90 and select up $1.15. However, boxed beef prices were lower for the week. Feeder cattle posted double-digit gains on stronger buyer interest at auctions and weakness shown in corn. Substantial weakness in grains overnight should provide further support.

Hogs finished a strong week as cutouts led the way. July futures were up over $5.00 last week with traders unwinding spreads and becoming more aggressive to get long the market. Demand is increasing as the calendar moves toward the July 4th weekend. Cutouts on Friday gained $3.25, providing support to the nearby months. Cash did not provide support as the National Direct Afternoon Hog report showed a decline of $1.62. However, packers may be more aggressive Tuesday due to the need to purchase hogs to meet demand.

	BULL SIDE		BEAR SIDE
1)	Feedlots are looking for higher cash this week and have a good chance of getting it. Slaughter pace is brisk and packers do not have many forward contracted.	1)	Boxed beef struggled last week, which may be an indication demand is slowing for more expensive cuts of meat. This could limit the aggressiveness of packers this week.
2)	Lower corn futures might provide support to the cattle complex as feed prices may settle back somewhat over time.	2)	Live cattle have a chart gap below the current level that may be filled at some point. Technical traders will view that as a target for price.
3)	Strong pork cutouts last week may have set the stage for this week as well as consumers prepare for the upcoming July 4th weekend.	3)	July and August hog futures gaped open Friday and did not close the gap. This may be filled in the near term.
4)	Hot weather may impact hog weights, resulting in less tonnage being readily available to the market. This may tighten supply during a period when demand increases.	4)	Slaughter pace remains less than a year ago with the slower pace keeping sufficient hogs available to the market.

**

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

(c) Copyright 2022 DTN, LLC. All rights reserved.