DTN Early Word Livestock Comments

Cattle: Higher Futures: Higher Live Equiv: $205.75 +$1.39*

Hogs: Higher Futures: Mixed Lean Equiv: $91.21 -$0.49**

*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:

Early strength was not able to hold Tuesday, allowing cattle futures to fall back into negative territory for a period before buying interest regained footing and moved futures to a positive close. There was no further direction from cash as bids or offers have yet to be posted. This may keep futures in a holding pattern until cash trades or there is an indication whether packers are bidding more aggressively. Bids and offers likely were not posted as most were dealing with or keeping watch on the adverse weather covering much of the country. Tuesday's slaughter totaled just 94,000 head -- 32,000 less than a week ago and 34,000 below a year ago due to the winter storm impacting many areas. Monday's slaughter was revised down to 104,000 head -- 11,000 less than initially reported. Boxed beef was higher with choice up $1.33 and select up $3.47.

Hogs posted strong gains in nearby months and more price volatility than deferred months. The February contract gained $6.52 over the past four trading sessions with price closing at the highest level since December 15, 2023. Price pushed above technical resistance but was not able to close above it. That could bring in some selling pressure Wednesday. May and later contracts showed minimal gains. The National Daily Direct Afternoon Hog report showed a gain in cash of $0.41 with a weighted average of $45.31. However, cutouts moved in the opposite direction, posting a decline of $0.49. Much like cattle slaughter, hog slaughter was down significantly due to the adverse weather and estimated at 395,000 head. Packers may be more aggressive again to make up for lost slaughter.

	BULL SIDE		BEAR SIDE
1)	Live cattle moving back to a higher close bodes well for further buying interest Wednesday.	1)	Higher cattle weights are a negative to the market, allowing for more beef on a per head basis. This may limit upside moves price to some extent.
2)	Packers may be more aggressive as they need to make up for lost time and reduced slaughter. Bids may surface Wednesday.	2)	There have been three consecutive days of lower lows in cattle futures, which could limit buying interest and keep the market sideways to lower.
3)	Hog futures were able to post a good close with February at the highest level in about a month. This may keep buying interest alive.	3)	February hog futures were not able to close above technical resistance with April not able to penetrate resistance. This could trigger long liquidation and a price correction.
4)	Packers have been more aggressive this week as they need to get hogs purchased sooner rather than later.	4)	Hog weights are expected to be high again this week, which keeps plenty of pork available to the market.

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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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