DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $219.30 +0.19*

Hogs: Higher Futures: Higher Lean Equiv: $98.55 -$1.34**

*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:

Traders are waiting to see an indication of what cash might do this week. At the same time, they are anticipating the upcoming Cattle on Feed report. The estimates for the report are for cattle on feed on Feb. 1 to be 100.1% with the trade estimates ranging from 99.4% to 101.1%. Placements will be the wild card again with the average estimated at 88.2% with the range of guesses from 81.6% to 94.9%. If the estimated placement number is correct, it would be the lowest placement number for January since 2007. Marketings in January are estimated at 100.0% with a range of 98.6% to 100.3%. Cash cattle have not traded nor have bids or offers been posted. Boxed beef was higher Tuesday with choice up $0.28 and select up $0.42. Feeder cattle futures were much stronger, pushing to new highs as there is optimism from buyers over continued strong cattle prices due to tighter numbers.

Hogs showed nice strength during the day but could not hold the strong gains. April, May, and June futures pushed through price resistance, but could not hold into the close of the day. Futures closed below technical resistance, which may trigger some selling as those holding long futures positions may bank some profits. Traders will decide whether to trade the strength of cash or the weakness of cutouts. The National Daily Direct Afternoon Hog report showed cash up $0.82, pushing the weighted average to $70.25. Cutouts showed weakness with a decline of $1.34 with most of the pressure from weakness in bellies.

	BULL SIDE		BEAR SIDE
1)	Feeder cattle pushed to new highs Tuesday, closing with triple-digit gains in all but the March contract. This keeps the higher trend alive and well.	1)	Some selling could take place ahead of the Cattle on Feed report, which could cause futures to retrace.
2)	The Cattle on Feed report is expected to show reduced placements in January, which would continue to support the market.	2)	Cash cattle will need to be steady with last week to maintain current price levels. Further weakness this week could result in lower futures prices.
3)	Hog futures were able to hold the strong gains of last week and push through price resistance on Tuesday. Stronger cash may support the market.	3)	The inability of hog futures to close above price resistance may increase short-term technical selling interest.
4)	The strong slaughter pace and higher cash may indicate both domestic and international demand for pork is increasing. April hogs closed at the highest price since Sept. 20, 2023, with June at the highest level since June 26, 2023.	4)	Traders may remain cautious ahead of the weekly pork export sales report with the revision of last week's numbers and the level of sales that will be reported this week.

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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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