DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $209.00 +$0.29*

Hogs: Lower Futures: Lower Lean Equiv: $87.14-$1.66**

*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:

Cash cattle traded Thursday rather than holding out to the end of the week. Volume was light but it may have been sufficient to set the stage for the rest of the week. Trade in the South was $1.00 lower than last week while dressed trade in the North was steady to $1.00 higher. Live cattle futures made a new low again Wednesday, but recovered significantly as futures carry a discount to cash. Boxed beef continues to struggle as choice gained $1.38 while select declined $1.73. Feeder cattle showed a little more pressure than live cattle with traders uncertain of buyer interest at auctions with the recent weakness of live cattle.

Hogs fell again as pork cutouts cannot find a bottom. Slaughter remains steady, keeping plenty of pork on the market. Recently, cutouts have been decreasing nearly each day with lower prices not able to stimulate greater demand. Cutouts declined $1.66 Wednesday. The National Direct Afternoon Hog report showed cash down $0.38. The February Cold Storage report will be released Thursday after the close, which will show pork in storage, providing an indication of demand during the month. Weekly export sales Thursday morning will need to show strong numbers as traders search for any supportive news. Saturday slaughter is estimated at 63,000 head.

	BULL SIDE		BEAR SIDE
1)	April live cattle and March feeder cattle futures have a chart gap remining above the current market. Gaps generally are filled.	1)	The lower lows and lower highs in cattle futures Wednesday did not bode well for the market technically.
2)	Northern dressed trade $1.00 higher should provide some support under the market.	2)	Boxed beef continues to struggle, which may indicate demand is faltering a bit as outside fundamental factors impact consumers.
3)	Hog futures are very oversold, which could trigger some short-covering as we head toward the weekend.	3)	New lows in hogs again Wednesday kept traders aggressively selling the market as support is lacking.
4)	Low pork prices should stimulate demand as pork is a very good value compared to beef.	4)	Hog numbers are not showing any signs of tightening as had been expected. Packers continue to purchase hogs without difficulty.

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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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