DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $186.89 +$0.12*

Hogs: Higher Futures: Higher Lean Equiv: Unavailable**

*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:

Southern cattle traded $3.00 higher at $148. More will need to be done today to round out the week as Northern cattle showed very limited activity. Feedlots are resolved to hold pushing packers into a corner. If they want to do business this week, cash will need to trade at least $3.00 higher across the board. Packers certainly do not want to go into next week short-bought. Boxed beef prices were mixed with choice up $0.23 and select down $0.11. Weekly export sales did not provide much support as they were ok, but not exceptional at 16,600 MT. Mixed trading activity may dominate today's trade as the Cattle on Feed report will be released this afternoon. 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.

Hog futures made a valiant attempt to keep the uptrend alive. February and later contracts were able to make new highs and close near the highs. Traders remained positive due to a strong weekly export sales report. There was 40,800 MT of pork sold with China still showing up in the top five buyers. Other than that, technical trade influenced the market. The National Direct Hog reports and the cutout reports were not released yesterday due to packer submission problems. The information will be released today at some point. Saturday hog slaughter is estimated at 144,000 head but that may vary due to packer problems that have been surfacing this week.

	BULL SIDE		BEAR SIDE
1)	Cash cattle in the North are expected to be $3.00 higher as was seen for Southern live cattle. Trade has yet to develop as feedlots hold out.	1)	Profit taking might take place today ahead of the Cattle of Feed report. Traders will rather be cautious than take a chance on a negative report.
2)	Lower corn futures could support feeder cattle and resume the slight price uptrend that has developed.	2)	Packers may begin to reduce slaughter to improve margins even though it seems demand continues to remain strong. High inflation may have a greater impact on retail sales through the end of the year.
3)	Hogs made a new high again yesterday in most contracts keeping the uptrend alive. Strong weekly export sales should continue to provide support.	3)	The massive price rally in hogs may be about over as short covering runs its course and futures become overbought technically.
4)	Slaughter pace continues to outpace a year ago as demand seems to have improved both domestically and internationally. Hog supplies remain current.	4)	The Central Government of China is set to release more pork with a sale of 20,000 tons scheduled for today. This will be the sixth such sale as they try to curb rising internal pork prices.

**

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.