DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $218.80 -$0.50*

Hogs: Lower Futures: Mixed Lean Equiv: $96.28 -$2.27**

*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 tried to run higher with February and April live cattle bumping the bottom of the chart gap, but that is where traders sold more aggressively. At least contracts were able to maintain the uptrend. Not much upside is expected ahead of Friday's Cattle on Feed report. There is much expectation for significantly lower placements, but that has failed to push futures substantially higher, which may indicate it is already factored in. The estimates for the report are for cattle on feed Feb. 1 100.1% with the trade estimates ranging from 99.4% to 101.1%. Placements are estimated at 88.2% with the estimates ranging from 81.6% to 94.9%. If the estimated placement number is correct, it would be the lowest placement number for January since 2007. January marketings are estimated at 100.0% with a range of 98.6% to 100.3%. A few cash cattle traded in Iowa for $288 Wednesday, but this is not sufficient to indicate prices for the week. Boxed prices were mixed with choice up $0.43 and select down $3.36.

Hog futures drifted in a narrow range Wednesday, posting a mixed close. Traders like the fact that cash hogs continue to advance with the National Daily Direct Afternoon Hog report showing a gain of $2.37, pushing the weighted average to $72.62. However, concern remains over the weakness of cutouts, which posted a decline of $2.27. It seems one is cancelling out the other, leaving traders guessing. The expectation is for packers to be less aggressive Thursday due to their aggressive buying so far this week. Saturday slaughter is estimated at 133,000 head.

	BULL SIDE		BEAR SIDE
1)	The Cattle on Feed report is expected to show low placements, which would continue to support the market.	1)	Slaughter numbers are decreasing, which may leave packers less aggressive in the cash market this week.
2)	February and April futures are knocking the bottom of the chart gaps and may fill those gaps ahead of the close Friday.	2)	Cash cattle trade may be delayed until late Friday as it usually is when there is a Cattle on Feed report. Futures may drift Thursday and Friday.
3)	Hog futures continue to hold the gains of last week with April futures closing at a new high again and the highest price since June 30, 2024.	3)	If pork cutouts remain weak and packers pull back the rest of the week, futures may show a price retracement as market prices find a balance.
4)	Strong cash is being paid for hogs, which may suggest tighter numbers and increased export demand.	4)	Caution may be exercised ahead of the weekly export sales report as USDA will revise last week's numbers.

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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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