DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $186.77 +$1.49*

Hogs: Higher Futures: Higher Lean Equiv: $109.21 -$1.37**

*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:

Feedlots have dug in their heels and seem not concerned about selling cattle this week unless packers meet their offers. Some light trading took place yesterday $3.00 higher but that was not enough to set the price for the week. However, many times early light trade indicates the level for the rest of the week. Feedlots want more and they feel they can get it. Weekly export sales may set the tone for the day. The past few weekly sales have not been very impressive, but they have not had a lasting effect on the market. Domestic demand remains strong. Traders may begin to turn their attention to the Cattle on Feed report to be released on Friday. The average trade estimate for cattle on feed is 99.1 percent. Placements are estimated at 96.2 percent with marketings at 103.9 percent. Caution will be exercised ahead of the report as the pattern has been for the trade being quite a bit more optimistic on placements than USDA.

Hog futures have rocketed higher the past four days with gains of around $7.00. Futures are going back up nearly as quickly as they fell in late September. Cash was strong both Tuesday and yesterday with a combined gain of $11.16. Strong cash is not expected to continue the rest of the week. Cutouts have struggled with values down $1.37 yesterday. Weekly export sales this morning may provide more fuel if they are strong. That, coupled with strong slaughter and weights considerably lower than a year ago, may provide the support the market needs. December has nearly regained the entire loss when the market crashed in later September. Saturday hog slaughter is estimated at 144,000 head.

	BULL SIDE		BEAR SIDE
1)	Some light cattle trade took place $3.00 higher. This may set the tone for the rest of the week's trading activity.	1)	Traders may begin turning their attention to the upcoming Cattle of Feed report once cash cattle trade takes place and cash prices are established for the week. This could put some pressure on futures.
2)	December live cattle futures are only about $1.00 from the contract high with current fundamentals making it possible it could make a new contract high as packers may need to be aggressive buyers in the weeks to come.	2)	Ongoing beef demand remains a concern as inflation remains strong and consumers are dealing with high food prices. This could impact demand through the end of the year.
3)	Even with the recent sharp rally, December hog futures are nearly $6.00 below the index, an unusually large spread for this time of year.	3)	February hog futures are near to closing the chart gap with April about $1.50 shy of closing its gap. Once these are filled, futures may settle back.
4)	Strong weekly export sales would push futures higher as the rally shows no sign of slowing down even though it is somewhat overbought technically.	4)	Cash is expected to be lower today as packers may have purchased much of what they need for the week. Cutouts have yet to find solid support.

**

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.