DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $183.43 -$0.86*

Hogs: Lower Futures: Higher Lean Equiv: $108.85 +$1.76**

*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 traded Wednesday with prices ranging from steady to $1.00 lower. Feedlots saw the weakness in futures and the potential for lower prices and decided to move cattle and take the best they could get. The strong U.S. dollar may have some impact on international demand, which may be seen on the weekly export sales report Thursday morning. Slaughter continues to remain strong, which requires more cattle to maintain the pace. However, there is concern that pace may slow if demand slows due to higher food and energy prices. Boxed beef closed lower with choice down $0.88 and select down $2.00.

Hogs continued the weakness, but the descent was less than it had been. October closed higher on some light spread trading. The market is oversold and ready for a bounce. There may be some short-covering Thursday as traders prepare for the Quarterly Hogs & Pigs report. Trade estimates are for all hogs and pigs at 99.2% of a year ago. Kept for breeding is estimated at 99.6%. Hogs kept for marketing is estimated at 99.1%. The National Direct Afternoon Hog report showed cash down $4.09 as packers have most of their needs met for the week and are paying less for what they purchase. Cutouts were higher posting a gain of $1.76. Saturday slaughter is estimated at 130,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle futures are oversold and ripe for a technical bounce. Fundamental strength may come if weekly export sales are good.	1)	Even with the strength of the outside markets Wednesday, cattle futures were not able to uncover any strength.
2)	Slaughter pace remains strong, which continues to move cattle through the system, keeping supply from backing up.	2)	The high U.S. dollar may impact international demand for beef. This would back up supply, resulting in lower prices to move product in the domestic market.
3)	Spread trading resulting in October closing higher may signal the "Katie-bar-the-door" selling may have run its course	3)	The weakness of hog futures has left traders unwilling to step into the market aggressively on the buy side. A price bottom needs to be found before traders feel confident of a price retracement.
4)	Hog futures are oversold, and short covering may take place ahead of the Hogs & Pigs report.	4)	Hog weights increased to 280.3 pounds, up 0.7 pounds for the previous week, indicating the trend for higher weights during this time of year is unfolding.

**

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.