DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $238.95 -$0.57*

Hogs: Steady Futures: Mixed Lean Equiv: $101.67 +0.67**

*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:

Cash cattle will trade Friday and the expectation has grown for higher cash to develop. One uncertainty is the weather factor as some plants have indicated they will not be operating due to the snow and high winds. This may push more cattle slaughter to Saturday and may impact the volume of cattle purchased for the week. However, packers are expected to pay more for cattle as they did not buy many for deferred delivery last week. Boxed beef prices were mixed with choice down $1.55 and select up $0.68 The Cattle on Feed report will be released after the close and show lower numbers than a year ago. The estimates are for on-feed as of March 1 at 98.2% of a year ago with a range of 97.0% to 99.0%; placements in February at 85.6% with a range of 79.1% to 90.5%; cattle marketed in February at 91.8% with a range of 91.0% to 93.2%.

Hog futures struggled on Thursday as the demand factor came into focus again due to the low weekly export sales report. Sales of 18,100 metric tons (mt) were a marketing year low. Not only is international demand concerning, but domestic demand is also a concern. Pork cutouts were higher on Thursday, gaining $0.67, but the variability of cutouts indicates that demand is mixed and has not benefited from increased demand due to high beef prices. Hog slaughter has been lower this week due to the weather impacting plant operations. Saturday slaughter is estimated at 150,000 head. Cash was lower on the National Daily Direct Afternoon Hog report with a decline of $1.63.

	BULL SIDE		BEAR SIDE
1)	The Cattle on Feed report is expected to be bullish with lower on-feed, placement, and marketing numbers than a year ago.	1)	It is uncertain how aggressive packers will be today. The market may have more premium in April futures than what is needed. This could result in some selling pressure.
2)	Traders seem confident that cash cattle will trade higher Friday, providing further support to the market despite what the Cattle on Feed report will show.	2)	Cattle futures have moved up so far and fast that traders may decide to sell once the Cattle on Feed numbers are known. A buy the rumor, sell the fact action.
3)	Hog slaughter has been lower due to the weather, keeping some plants from operating -- and not from slower demand. Slaughter has held well and is higher than a year ago despite higher hog weights indicating steady demand.	3)	Hog futures will need to find support or further liquidation could take place.
4)	Hog futures held well despite the low export sales report. The current futures market seems to have had this factored in.	4)	There is little for hog traders to get excited about. Pork cutout prices continue to remain choppy and demand seems steady. Lower export sales could indicate tariffs may be having an impact.

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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