DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $220.23 +1.43*

Hogs: Higher Futures: Higher Lean Equiv: $98.00 +$1.72**

*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 COMMNETS:

Technical traders seem to be trying their hardest to close the chart gaps in the February and April live cattle contracts but have failed so far. The February contract is running out of time with the last trading day Feb. 29. Cash cattle have not yet traded, other than the few earlier this week. The focus of both packers and traders is the Cattle on Feed report Friday afternoon. The estimates for the report are cattle on feed on Feb. 1 to be 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%. Boxed beef was higher with choice up $1.99 and select up $1.35. Weekly export sales will be released Friday morning but are not expected to have an impact on the market.

Hog futures continued to push higher with April leading the way, posting a triple-digit gain. Futures nearly matched the high of June 26, 2023. It has been an impressive increase since the beginning of the year. Unfortunately, futures were not able to push through resistance. However, such was not the case with June as it moved above and closed above short resistance. Cash remained strong Thursday with the National Direct Afternoon Hog report up $0.58 to a weighted average of $73.20. Cutouts posted another nice gain with an increase of $1.72. Weekly export sales will be released Friday morning with USDA correcting inaccurate numbers in the previous report. Saturday hog slaughter is estimated at 133,000 head. The January Cold Storage report will be released Friday afternoon.

	BULL SIDE		BEAR SIDE
1)	February and April live cattle futures continue to move ever so much closer to closing the chart gaps with February having until Thursday to accomplish the task.	1)	Cattle futures falling back from the gains Thursday may indicate a friendly Cattle on Feed report is already be factored in.
2)	Placements are expected to be down substantially from a year ago, which should continue to support the market.	2)	If placements in January are reported to be higher than trade expectations, live cattle futures may fall back in reaction.
3)	May and later hog futures contracts closed at the highest level since March with strong support underpinning the market.	3)	Hog futures were unable to hold earlier gains Thursday, which could indicate price resistance may have been reached.
4)	Weekly hog weights declined 0.7 pound, averaging 288 pounds. The packers have been aggressive and are finding less tonnage available.	4)	The average weekly hog weights remain 2 pounds above a year ago, leaving more pork available for processing.

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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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