DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $193.11 +$0.67*

Hogs: Higher Futures: Higher Lean Equiv: $112.09 +$2.08**

*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:

Due to packers not being very aggressive last week, the anticipation is for them to step up to the plate this week now that the holiday is over. Even though they were not very aggressive last week, they managed to purchase some cattle for deferred delivery. Whether this leaves them less aggressive than anticipated this week or not will likely be seen Wednesday as cash trading is expected to surface. Boxed beef was higher with choice up $1.05 and select up $0.72. Holiday demand is being assessed and retail outlets are restocking shelves. Demand moving forward will be key to price potential.

Cash hogs finally showed some strength with the National Direct Afternoon Hog report posting a gain of $0.62. This was refreshing, although cash has a big hole it needs to climb out of due to the weakness last week. Packers needed to step up Tuesday and possibly the rest of this week to get back on track with slaughter. Cutouts increased $2.08 with bellies jumping $17.94. Now that the chart gap in October is closed, it provides more confidence to technical traders to buy into the market in anticipation of a price retracement.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures pushed higher as the market looks to regain the uptrend. This provides traders with the confidence to buy.	1)	With packers having purchased some cattle ahead last week, they may not need to be as aggressive this holiday-shortened week. There may be a limit to what they are willing to pay.
2)	Higher boxed beef as retail outlets restock production may cause packers to be more aggressive this week in the cash market.	2)	Corn prices trending higher may leave feedlots willing to move cattle aggressively rather than wait to see if cash might increase.
3)	With the holiday behind, packers may be more aggressive this week as they look to increase slaughter pace to get back to usual business.	3)	Packer margins will need to improve, or hogs will struggle as they reduce slaughter in the attempt to pay less for hogs and receive more for cutouts.
4)	Lower prices should spur demand as consumers try to stretch their dollar. Pork is a good buy at current prices.	4)	The U.S. dollar is at the highest level in 20 years which may impact pork exports.

**

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.