DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $220.08 -$0.27*

Hogs: Higher Futures: Higher Lean Equiv: $95.55 +0.05**

*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:

Cattle futures floundered during the first hour of trade Thursday, eventually uncovering buying interest and pushing contracts significantly higher. Both live and feeder cattle futures closed at the highest level since early November. Stronger cash trade developed Thursday with cash in the South up $2 at $175 while Northern dressed trade was $3 higher at $277. Price strength may temper somewhat Friday ahead of the weekend, but cash strength potentially indicates higher cattle prices may unfold. Packer margins are tighter than a year ago, but they need to purchase cattle to fill demand and to purchase ahead. Boxed beef prices were mixed with choice down $0.82 while select increased $0.61.

Nearby hog futures pushed to the highest close since Nov. 20, 2023. The bullish implications of cash have provided strong support over the past three days. The National Daily Direct Afternoon Hog report showed a cash gain of $1.53 with a weighted average of $54.63, about $10.00 higher than it was not too long ago. Cutouts only gained $0.05, but it is a gain, nevertheless. This should support the market again Friday, although gains may be limited ahead of the weekend. The earlier optimism over better demand has now become a reality supported by fundamentals. Saturday slaughter is estimated at 289.000 head.

	BULL SIDE		BEAR SIDE
1)	Stronger cash will provide feedlots with greater confidence in the potential for further gains next week.	1)	It is the end of the week and higher cash is already factored in. Some liquidation of cattle futures may take place Friday.
2)	Higher prices are being paid for calves and feeder cattle at auctions, which will support feeder cattle futures.	2)	Boxed beef demand has been struggling recently, which may indicate demand may be slowing somewhat. This could limit the aggressiveness of the packers next week.
3)	Hog futures are trending higher, supported by stronger cash. Market-ready hog supplies seem to have tightened.	3)	April and June hog futures closed near price resistance and may have a difficult time breaking above that level Friday.
4)	April and June contracts closed near price resistance. A break above that level would trigger further short-covering.	4)	Packers may be caught up with immediate slaughter needs and some purchased ahead. They may not be as aggressive in the cash market Friday.

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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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