DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $220.74 +0.51*

Hogs: Higher Futures: Lower Lean Equiv: $96.80 -$0.17**

*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:

Live cattle futures did not share the sentiment of the bearishness of the placement number on the Cattle on Feed report. Early lower futures provided the opportunity for traders to buy into the market for the long term. The winter storm in some of cattle country may increase buying interest in futures as it takes place when there is some calving happening. The January Cold Storage report showed total beef in inventory decreased by 4.9 million pounds from December and was 11% below January 2023. Boxed beef was higher Monday with choice up $1.18 and select up $1.68. Feeder cattle remained under pressure Monday, but that is expected to be short-lived. The demand for feeder cattle and calves remains strong.

Hog futures held well Monday, even though there was cash weakness. Spread trading resulted in weakness in the April and May contracts, while later contracts were higher. Cash was lower to begin the week with the National Direct Afternoon Hog report showing a loss of $0.58, moving the weighted average to $70.91. In the past few weeks, packers have been more aggressive at the beginning of the week. This may limit upside movement unless cash moves higher. Cutouts finished the day lower with values down $0.17. The January Cold Storage report showed pork inventory at 468.0 million pounds, up 40.6 million pounds from December, a gain of 10%. However, inventory was down 10% from a year earlier. Bellies were down 8% from a year earlier.

	BULL SIDE		BEAR SIDE
1)	The February live cattle contract has three days remaining to close the chart gap before the contract ends. There is a strong possibility this may be accomplished.	1)	Beef demand may reach a plateau where consumers slow down purchases due to escalating prices.
2)	Even though placements on the Cattle on Feed report were higher than expected, they were 7% below a year ago, which should continue to provide support in the market.	2)	Cattle futures have increased substantially since December and may be ripe for a price retracement once the nearby contracts close the chart gaps.
3)	New highs were again made in the June through October hog futures contracts Monday, keeping the uptrend intact. Traders remain optimistic about demand.	3)	The recent weakness of pork cutouts may indicate prices have reached a level at which consumers may slow purchases.
4)	The packers may step up more aggressively to procure the hogs they need this week. Slaughter continues to remain brisk.	4)	Hog futures are overbought and could retrace at any time as the market corrects itself.

**

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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