DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $188.58 -$2.40*

Hogs: Lower Futures: Mixed Lean Equiv: $114.65 +$2.11**

*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 waited for cash cattle to move and were disappointed, leaving the market floundering. There were a few dressed sales at $1.00 higher in Nebraska, but the volume was very light and did not lend itself to solid price direction. Cattle will trade Thursday, but there is no way of anticipating who will give in. Feedlots seem adamant to hold, possibly forcing the hand of packers. The concern is that boxed beef took a hit Wednesday with choice down $3.19 and select down $3.47. However, slaughter pace remains strong. The Biden administration indicates a tentative deal has been reached with the railroad, avoiding a strike Friday. This may alleviate some of the uncertainty in the market.

Nearby hogs lost some of the gains from Tuesday's strong rally. Cash faltered with the National Direct Afternoon Hog report decreasing $1.15. Packers were able to purchase quite a few hogs that were needed to maintain slaughter pace. Packers may not be quite as aggressive again Thursday, which may leave traders uncertain of further gains. Cutouts gained $2.11 with bellies showing a strong gain of $6.02. Weekly export sales will be released Thursday morning. This report will contain four weeks of export sales data, providing the market with a lot to decipher. This could set price direction. Saturday hog slaughter is estimated at 72,000 head.

	BULL SIDE		BEAR SIDE
1)	Feedlots have been hanging tough with their offers, which may force packers to pay up.	1)	Cattle futures have a minor gain of cash already factored in. This may leave futures choppy.
2)	The railroad strike seems to have been averted, resulting in less disruption of the economy than feared. This may keep food prices from increasing further.	2)	Boxed beef weakness was not positive to the market, indicating demand may be slowing.
3)	Pork cutouts gained Wednesday, which is good news for packers as they are attempting to improve their margins.	3)	The inability of hog futures to follow through Wednesday leaves the market vulnerable to further technical selling.
4)	If the past four weeks of export sales have been good, the market may hold recent gains and move higher.	4)	Less-than-desired export sales over the past four weeks could keep pressure on lean hog futures.

**

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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