DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $235.51 +$0.10*

Hogs: Lower Futures: Mixed Lean Equiv: $100.43 -$3.00**

*Based on the formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. The 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 became more optimistic that cash cattle might trade higher this week. Feedlots held out on Wednesday, even though a packer put out a higher bid than last week. The continued strength in feeder cattle with new highs on nearly a daily basis and live cattle futures being supported, provides more confidence that higher cash will be achieved. Boxed beef was mixed on Wednesday with choice down $0.10 and select up $0.67. The tariff news seems to be digested with the market focusing on supply and demand. It is anticipated that beef exports may not be impacted significantly from tariffs and domestic demand is holding well as the slaughter pace has increased.

Hog futures could not find solid direction, closing mixed Wednesday. Futures in the June through August contracts may have a difficult time moving above $100 as fundamental support continues to be variable. Pork cutouts have been unable to show consistency, which is what is needed to support futures. The slaughter pace continues to remain strong, indicating packers need hogs to meet demand, but the strong slaughter pace keeps a sufficient supply of pork for the market. Pork cutouts fell $3.00 on Wednesday. The National Daily Direct Afternoon Hog report showed cash up $0.66. Packers are not expected to be aggressive Thursday.

	BULL SIDE		BEAR SIDE
1)	Feeder cattle futures have made new contract highs for four consecutive days. This strength keeps traders bullish and willing to continue to support the market.	1)	Feeder cattle futures will not continue to increase and buyers may back off as prices become too high. Futures are overbought and technical selling could be triggered from any bearish news.
2)	Higher futures have given the feedlots confidence to hold for higher cash. A higher bid than last week was passed Wednesday.	2)	Packers may try to hold the line on cash, which may result in cash trading at steady prices with last week. This could be negative to futures.
3)	Hog futures have been consolidating the past few days. Traders have digested the tariff news and are waiting to see if demand remains consistent.	3)	Hog weights increased last week, averaging 289.6 pounds, up 0.5 pounds from the previous week and 2.0 pounds higher than a year ago.
4)	Hog slaughter pace remains strong with packers needing hogs to meet demand. Pork cutouts remain variable, but product continues to move.	4)	Hog futures have consolidated the past few days. Traders will need to see improving fundamentals or more aggressive selling could pressure the market. .

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.

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Robin Schmahl can be reached at rschmahl@agdairy.com

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