DTN Early Word Livestock Comments

Cattle: Steady Futures: Lower Live Equiv: $216.92 +0.66*

Hogs: Lower Futures: Mixed Lean Equiv: $92.01 -$1.26**

*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 suffered a blow Wednesday as a few cash cattle sales took place in the South at $2 lower. Cash trading activity was light, but the fear is it could set the stage for cash direction this week. The current asking prices by feedlots are higher than that and higher than a week ago, but those offers may not be attainable. Boxed beef prices are putting some pressure on the market with choice down $1.81 and select down $1.72 on Wednesday. Boxed beef's weakness and the potential weakness of cash could result in a greater correction in the futures prices. Feeder cattle futures were under greater pressure, not because of feeder prices in the country, but likely tied more to a price correction of the potential weakness of cash cattle this week.

Hog futures had a banner Wednesday with April leading the complex as it takes over as the lead month. The increase in futures eliminated the losses of the past 1 1/2 weeks and may challenge the high from Jan. 30. Later contracts were not quite as exuberant, showing fewer gains through December and 2025 contracts closing lower. The drop in hog weights and some talk hog numbers may be tightening might have played a role in price strength. The National Daily Direct Afternoon Hog report was up $0.02 with the weighted average at $68.21. However, cutouts took another hit with values down $1.26. Weekly export sales might provide some support if they are strong again as expected. Saturday slaughter is estimated at 188,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle supplies are expected to remain tight for the rest of this year, which should provide overall support to the market. Price retracements may be temporary.	1)	Live cattle futures have closed lower the past three days and with the potential for lower cash this week, a larger decline may be seen.
2)	Packers need cattle and may be willing to pay at least steady money with last week. The few early sales that took place lower may be the exception.	2)	Boxed beef prices have shown more weakness with choice cuts now nearly $8.00 below the $300.00 level.
3)	The drop in hog weights of 2.1 pounds last week was a surprise which may increase slaughter pace to make up the tonnage.	3)	Pork cutouts continue to struggle, not showing any consistency of demand.
4)	Export demand has been improving and should continue to do so as China may continue to be a large buyer.	4)	The slaughter pace remains strong with an ample supply of hogs readily available for processing. Hog weights remain higher than a year ago.

**

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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