DTN Early Word Livestock Comments

Cattle: Lower Futures: Lower Live Equiv: $243.33 -$0.24*

Hogs: Steady Futures: Higher Lean Equiv: $97.77 +$2.26**

*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:

Cattle futures were higher Friday as traders seem to be looking at the equity markets for direction and trading accordingly. There is no question cattle supplies are low and the nation's herd is not rebuilding anytime soon. However, the current concern over the impact of tariffs has created substantial uncertainty over ongoing demand. International demand may slow and recession fears are evident. Slaughter slowed noticeably this week, but the reason for the decline is uncertain. Boxed beef prices struggled last week, with Friday showing choice down $0.07 and select down $1.00. Cash did not hold well last week with cash cattle anywhere from $4.00 to $9.00 lower. The Commitments of Traders report showed fund traders reducing their long live cattle futures position by 21,509 contracts to a net-long of 117,617. They were net sellers of 4,961 feeder cattle contracts, reducing their net-long position to 26,951.

Hog futures closed higher on the week in all contracts except the nearby April. Monday is the last day to trade the April contract and May will become the lead month. Futures closed higher as traders felt confident the market may have established support. Cash struggled most of the week, with Friday showing a decline of $2.57 on the National Daily Direct Afternoon report. This moved the weighted average down to $83.10. Pork cutouts were higher, posting a gain of $2.26. That may not be sufficient to provide further support under the market unless we can see increased demand and packers become more aggressive. The Commitments of Traders report showed the fund traders reducing their futures position in hogs by 18,239 contracts to a net-long position of 33,997.

	BULL SIDE		BEAR SIDE
1)	The stock market is expected to start higher Monday morning as the Dow futures are trading higher in the overnight session. Cattle futures have been following the stock market.	1)	Cattle slaughter was significantly lower last week and may be an indication of reduced demand both domestically and internationally.
2)	Cattle futures may be building support based on last week's movement. Traders may support the market to begin the week.	2)	Further cash weakness could take place again this week ahead of the Easter weekend.
3)	Hog futures closed higher for the week as the market corrected from being oversold, and traders became more confident of better demand.	3)	The weakness of cash last week may be difficult to overcome, as packers have been able to buy what they needed without difficulty.
	There is a chart gap in hog futures above the market from a week ago that is not much higher and should be filled soon.	4)	There is a sufficient supply of hogs at higher weights. Packers do not need to chase the market higher to obtain the supply they need.

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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