DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $229.87 +$0.70*

Hogs: Higher Futures: Mixed Lean Equiv: $99.39 +$0.22**

*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 traded higher for the week with Southern cattle up $1.00 and Northern dressed cattle gaining $4.00. This was impressive after higher cash the previous week. The packers have been trying to hold the line by slowing slaughter, but they have not been able to back up cattle in the country. Consumer demand continues to remain strong with boxed beef up again Friday: choice gaining $1.12 and select gaining $0.71. It will be an interesting week with feedlots likely holding for higher prices, but another week of higher cash may be difficult to obtain. Feeder cattle futures are in a downtrend and will need to find support to stabilize or reverse the trend. Feeders are still trading higher at auctions, which should help futures find support. The Commitments of Traders report showed funds increasing their long futures positions in live cattle by 3,299 contracts to a net long of 67,347 contracts. Funds sold 1,144 contracts in feeder cattle reducing their net-long positions to 9,335 futures contracts.

Hog futures had a strong Friday with July and August contracts making new contract highs. The nearby April contract closed at the highest price since March 1. June is knocking on the door of price resistance from two weeks ago. Cash and cutouts provided support to the market Friday. The National Direct Afternoon Hog report showed a gain of $0.24 with a weighted average of $79.94 closing out a nice week of cash strength. Cutouts gained $0.22, indicating growing consumer demand with the cutout value reaching $93.47. This seems to provide further evidence that hog numbers may be tightening. The Commitment of Traders report showed funds selling 2,354 hog contracts, reducing their net-long position to 63,048 futures contracts.

	BULL SIDE		BEAR SIDE
1)	Higher cash cattle last week should continue to provide overall support to the market.	1)	The trading activity during the second half of last week pushed live cattle futures back into the sideways trading range.
2)	Boxed beef has been increasing steadily, indicating demand remains strong even with the higher prices. Prices have not reached consumer resistance.	2)	Traders will be cautious over the ability of cash to gain again this week after two consecutive weeks of strength.
3)	Cash hogs were consistently higher last week as the packers remained aggressive. There does not seem to be an overabundance of market-ready hogs at present.	3)	Weekly hog weights gained 0.3 pounds to an average of 287.6 pounds. This remained 0.5 pounds above a year ago.
4)	The June contract reached back to its previous high and chart resistance Friday. A break above that level could bring in more buying interest.	4)	Packers may wait to see the weekend pork movement before becoming too aggressive with purchases. Cash may be weaker to begin the week.

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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