DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $214.95 +$0.30*

Hogs: Lower Futures: Mixed Lean Equiv: $91.60 -$1.59**

*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:

The cattle complex was again supported by lower corn prices. Live cattle did not push to new contract highs with March feeder cattle posting the highest close since Aug. 22, 2022, and nearing the contract high. Later contracts continue to post new contract highs. Feeder cattle have been in demand with strong prices being paid at auctions. Live cattle did not see any cash trade Tuesday with early asking prices indicating feedlots want at least $1.00 to $2.00 more. February live cattle saw an impressive gain of $2.50 into the close of the contract. April is now front-month with a $2.00 discount to where February left the board. Boxed beef showed choice up $0.61 and select unchanged from the previous day.

Hogs struggled throughout the day with April and May finally closing higher. Traders were waiting for cash and cutouts for direction but did not find anything solid enough to buy into the market. Packers bought a good number of hogs Tuesday but did not have to pay up to get them. The National Direct Afternoon Hog report showed cash down $0.11. Even though it was a minimal drop in price, it was enough to limit trader interest. Cutouts declined $1.58 keeping any bullish attitude at bay. Demand needs to improve, or the market could flounder Wednesday.

	BULL SIDE		BEAR SIDE
1)	April live cattle took over as front-month with a $2.00 discount to where February went of the board. Higher cash this week may push the market to new highs.	1)	Feeder cattle are at lofty levels with futures overbought technically. This could trigger some liquidation.
2)	March feeder cattle are poised to close the chart gap from Aug. 22, 2022, and then challenge the contract high.	2)	Live cattle futures have not been able to make new highs after the Cattle on Feed report, which could indicate the market might be running out of steam.
3)	Cash hogs were down slightly, but considering the amount of hogs purchased, the market held well.	3)	Hogs showed lower cutouts Tuesday, leaving traders searching for fundamental support from better demand.
4)	If hog futures find some support here, it could point to a positive technical picture and generate some buying interest.	4)	Fund traders are short the hog market and see no reason to cover those short positions leaving price rallies short-lived.

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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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