DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $212.63 -$1.42*

Hogs: Lower Futures: Higher Lean Equiv: $94.89 +$0.64**

*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 futures struggled for a while Wednesday as traders seemed to pull back some of their optimism over cash. Front-month April closed lower with traders waiting to see the level at which cash will trade. There is some idea cash may not be much better than last week. However, feedlots have asking prices $1.00 to $2.00 higher. It may be another week during which cash business will not be done until Friday. Boxed beef prices were mixed yesterday with choice down $3.15 and select up $0.63. It seems boxed beef prices are teetering a little this week after previous weeks of strength. The WASDE report showed beef production up 170 million pounds from the February estimate but 1.625 billion pounds lower than last year. This stands to reason as cattle numbers are lower. The average steer price was raised $3.00 to $162. This is $17.60 higher than the average for 2022.

Hog futures continued the effort to move higher. However, even with stronger cash and cutouts, traders remain somewhat reluctant to be aggressive on the long side of the market. There may be some delayed reaction to the higher cash and cutouts Wednesday as the final print is not released until after the close. The National Direct Afternoon Hog report showed cash up $0.55. Cutouts were able to gain $0.64. Packers are not expected to be as aggressive Thursday as they purchased quite a few hogs already this week. The WASDE report showed USDA estimates pork production this year at 27.410 billion pounds, down 25 million pounds from their February estimate. However, this is up 416 million pounds from last year. The average hog price was reduced $0.50 to $66.00. This would be $5.21 lower than the average last year.

	BULL SIDE		BEAR SIDE
1)	Feeder cattle continue to make new contract highs as traders continue to buy the trend. Only front-month March is below $200.	1)	Some cash cattle expectations have been pulled back a bit this week. Demand may slow as consumers reach a level of price resistance.
2)	Beef demand remains strong and packers need cattle to keep that demand satisfied. They will pay no less than steady money this week.	2)	If beef weekly export sales are not much better than the past few weeks, traders may sell the market more aggressively as they take profits.
3)	Higher cash and cutouts Wednesday may influence higher trade Thursday. The April contract shows strength as the index continues to move higher.	3)	The WASDE report Wednesday did not provide much support for the hog market. Even though these are estimates, the numbers do influence trading. It may limit upside potential.
4)	Another week of strong export sales could increase the interest of traders to buy hog futures for the long haul.	4)	Cash is expected to be lower Thursday as packers purchased quite a few hogs again Wednesday.

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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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