DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $197.40 +$1.17*

Hogs: Higher Futures: Higher Lean Equiv: $113.33 -$3.56**

*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:

Traders saw nothing to generate buying interest in futures yesterday. The focus is on the cash market. Feedlots are looking for nothing less than steady cash last week with feedlots in the North having not revealed any offers as of yet. Today will likely be a day of reckoning as business should surface to get accomplished what needs to be done. Front month June live cattle goes off the board Thursday with August taking over. China relaxing its quarantine policy may provide support for beef and commodities in general. China has been a major buyer with overall U.S. beef exports setting new records this year. Boxed beef took away some of the strong gains seen for choice cutouts on Monday with price down $1.54 yesterday with select down $1.93.

Pork cutouts have not performed well so far this week with another large decline of $3.56 yesterday. Cash was higher on the National Direct Afternoon Hog report showing a gain of $4.65. Slaughter pace is really suffering with the revised number for Monday being only 450,000 head and running well below last week and a year ago. As with beef, China relaxing its COVID quarantine policy may increase its demand for pork. The Quarterly Hogs & Pigs report will be the focus of trading today. 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%. The report will be released at 2 pm Central time.

	BULL SIDE		BEAR SIDE
1)	The Cattle of Feed report indicates potentially tight cattle supplies in the fourth quarter. Futures support that potential.	1)	Cattle have not been able to find support from the neutral to friendly Cattle on Feed report last week. They are struggling to find footing.
2)	August cattle futures will take over as the front month on Friday carrying a substantial discount to cash. This discount may be reduced or eliminated in the near future.	2)	August live cattle futures anticipate further cash weakness through the summer.
3)	Hog futures are near the bottom of the range and with the selling of the past two days, there may be short covering prior to Hogs & Pigs report.	3)	Hog futures have been in a sideways range with prices near technical support. If support is penetrated, further selling might take place.
4)	Strong cash yesterday may indicate increased demand activity requiring packers to increase slaughter pace.	4)	Slow slaughter pace keeps hogs backed up and readily available to packers. This leaves them less aggressive as they do not have to scour the countryside to find them.

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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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