DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $217.18 +$0.49*

Hogs: Higher Futures: Higher Lean Equiv: $92.34 -$1.37**

*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 weakness of cattle futures was quickly reversed Tuesday and traders wanted to buy into the market in anticipation of higher prices to come. Feedlots in Kansas floated asking prices of $181 to $182. Packers may need to be aggressive this week as the slaughter pace is strong and they do not have many cattle purchased ahead. It will be interesting to see whether they are as aggressive as last week. Traders seem to think so, due to futures having higher cash already factored in. Boxed beef was higher Tuesday with choice up $0.59 and select up $0.83. Both choice and select cutout prices are running above last year and the three-year average.

Hog futures just could not find sufficient buyer aggressiveness to overwhelm the sellers, resulting in prices under pressure throughout Tuesday. The selling pressure may slow Wednesday as prices have corrected from being overbought. However, traders may not be very aggressive as they balance higher cash and lower cutouts from Tuesday. The National Daily Direct Afternoon Hog report showed cash up $4.58, increasing the weighted average price to $64.45. With cash higher Tuesday, it is probable packers will again bid higher Wednesday to obtain the hogs they need for slaughter. Cutouts did not fare as well with values down $1.37. The weakness came from bellies dropping $5.96.

	BULL SIDE		BEAR SIDE
1)	Cattle futures, reversing the losses from Monday and pushing higher on Tuesday, bode well for the market. Traders anticipate higher cash.	1)	Cattle futures already have higher cash factored in, which may leave upside potential limited for the rest of this week.
2)	Cattle futures are moving to close the chart gaps that have remained since Oct. 23, 2023. The June contract almost closed the gap Tuesday.	2)	Some cattle feeders are getting calls from sellers offering cattle to them. Higher feeder prices may be limiting some buying interest at auctions.
3)	Hog futures have been under pressure for the past four days and have corrected their overbought status. Prices may be ready for a correction.	3)	Hog futures have yet to find strong buying interest to reverse the recent downturn. There is concern over ongoing demand.
4)	The strong cash Tuesday indicates packers need hogs and may continue to be aggressive again Wednesday. This may indicate some strong export sales activity again.	4)	The packers are having little difficulty obtaining the hogs they need to maintain the strong slaughter pace. Weights continue to run higher than a year ago.

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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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