DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $228.56 Unchanged*

Hogs: Higher Futures: Mixed Lean Equiv: $97.76 -$0.63**

*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:

The cattle complex closed with triple-digit gains across the board Wednesday as traders became more optimistic over prices this week. Earlier in the week, there was a strong possibility cash cattle would trade steady to maybe lower due to the gains last week and cattle being purchased ahead for deferred delivery. That seems to have changed as feedlots are holding and asking for more. Trade should take place Thursday unless the packers want to play hardball and will wait it out and pay no more than steady cash. Boxed beef prices were mixed with choice down $0.77 and select up $1.44. Live cattle futures pushed and closed above the sideways trading pattern on Wednesday which could result in traders becoming more aggressive buyers. The April contract is poised to close the chart gap.

Wednesday, nearby hog futures pulled back from their strong gains of Tuesday but did close about $1.00 off their lows. This indicates there is buying interest on a price break. The National Daily Direct Afternoon Hog report showed cash up $0.92 with a weighted average price of $78.27. There is a strong possibility packers will remain somewhat aggressive Thursday. Cutouts declined $0.63, which could keep some pressure on the trade. Export sales will be released Thursday morning and may have some influence on the market. Saturday slaughter is estimated at 116,000 head.

	BULL SIDE		BEAR SIDE
1)	The April live cattle contract is poised to close the chart gap remaining from October. There is a strong possibility this will be accomplished Thursday.	1)	If packers hold the line and will not pay more for cash cattle this week, futures will likely sell off again.
2)	Feedlots seem to be resolved to hold for higher prices this week. They feel no urgency to move cattle.	2)	Cattle futures may fall back into the sideways trading range like they did last week when prices reached this level. Further gains may be difficult to materialize in the near term.
3)	The packers continue to remain somewhat aggressive with their hog purchases, indicating both domestic and international demand is doing well.	3)	Higher hog slaughter keeps the market supplied with pork and may limit the strength of cutouts.
4)	The hog slaughter pace remains strong, keeping hogs from backing up in the country and potentially tightening the supply of market-ready hogs.	4)	A decrease in weekly pork exports could trigger further selling in nearby months as it could mean export demand may be slowing.

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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