DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $227.56 +$1.29*

Hogs: Higher Futures: Higher Lean Equiv: $99.43 +$1.40**

*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 expressed their concern over the potential for cash trade this week. The gains last week were a victory feedlots will want to capitalize on; but packers will not be so apt to be aggressive. They continue to reduce slaughter to improve margins, which is increasing boxed beef prices. However, it does not seem to be backing up supplies in the country. Feedlots will post higher offers but may need to move some cattle if they are ready for the market. The packers were able to purchase cattle for deferred delivery last week, potentially leaving them less aggressive. Boxed beef increased Monday with choice up $1.84 and select up $1.45. Feeder cattle futures could not find any price strength with contracts opening steady and then spending most, or all, of the day in negative territory.

Hog futures were on a roller coaster Monday, closing lower as increased selling pressure dominated the end of the trading day. Tyson Foods announced the closing of the plant in Perry, Iowa, which rattled the market, leaving traders guessing as to the impact it may have on processing. This may settle out Tuesday as traders turn their focus back on cash and cutouts. The National Direct Afternoon Hog report showed a minor loss of $0.02 while cutouts showed a gain of $1.40. This may provide some support to the market Tuesday. There is strong potential that cash will trade higher Tuesday following the pattern of the past few weeks.

	BULL SIDE		BEAR SIDE
1)	Boxed beef remains strong, indicating demand remains good. This may require packers to be more aggressive with cattle purchases.	1)	Packers continue to hold a lower slaughter pace, which may leave them less aggressive this week. A fair amount of cattle were purchased for deferred delivery last week.
2)	Live cattle futures remain in a range with the chart gap remaining above the market in April.	2)	Traders are less optimistic about cash cattle this week after the strong gains last week.
3)	April hogs continued to bear the brunt of spread trading while later contracts held the uptrend. Traders may unwind spreads soon.	3)	The Tyson plant closure leaves uncertainty over what will happen with the hogs that would have been processed at that facility and how much this will impact slaughter numbers and farms that shipped to the plant.
4)	The announcement of the Tyson plant closure created uncertainty and volatility Monday. This should be absorbed into the market Tuesday.	4)	April continues to eliminate any premium it is holding to the index even though the contract has a month to trade and cash seems to be improving. Traders seem to have lost some optimism for the near term.

Editor's note: Please join DTN Lead Analyst Todd Hultman and DTN Ag Meteorologist John Baranick for our next Ag Summit Series event -- Craft a Gameplan for Tough Weather, Prices -- on Thursday, March 14 at 8:30 a.m. CT. They'll have lots of time for Q&A. Register here: https://dtn.link/…

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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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