DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $198.57 +$2.01*

Hogs: Higher Futures: Higher Lean Equiv: $116.89 -$3.17**

*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:

Lower corn prices may have feedlots feeling good about holding out for higher cash this week. The past two weeks showed aggressive packer buying and that may not be the end of it. Sure, they have some cattle purchased ahead but not a large amount that will allow them to sit back. Showlists are not showing an abundance of cattle for the week. Feedlots may not sell cattle too readily this week as lower corn prices and the cash momentum are on their side. Boxed beef made a surprising increase yesterday of $3.70 higher for choice and $0.22 higher for select. Higher corn futures today may temper some of the strength of feeders.

Hogs could not follow through on the rebound on Friday. Cutouts were pointing lower on the midday report and fell substantially when the final tally for the day was done with a loss of $3.17. The National Direct Afternoon report showed cash down a whopping $5.10. the combination of cash and cutouts did not support futures. The supportive aspect was that futures did not fall any more than they did. This was likely due to the upcoming Hogs & Pigs report that will be released tomorrow. Traders will position themselves for the report. The average estimate is for All hogs and pigs at 99.3%, kept for breeding at 98.9% and kept for marketing at 99.3%.

	BULL SIDE		BEAR SIDE
1)	Feedlots will be holding for higher cash as packers will need cattle to maintain the brisk slaughter pace.	1)	Packers paid up significantly over the past two weeks with the potential for them not needing to be aggressive the week before July 4.
2)	Strong boxed beef yesterday may indicate renewed demand interest. Consumers are adjusting to inflation and may keep beef an important part of their diets.	2)	The price action of futures over the past week does not indicate a strong market technically.
3)	Hog futures held well in the face of substantial weakness of cash and cutouts. Packers are expected to be more aggressive today.	3)	Both cash hogs and cutouts fell significantly yesterday which does not bode well for price strength.
4)	Traders hold some optimism that Hogs and Pigs report on Wednesday will be supportive to the market.	4)	Packers continue to obtain hogs without having to be very aggressive.

**

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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