DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $244.21 -$0.21*

Hogs: Higher Futures: Mixed Lean Equiv: $97.54 -$1.05**

*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 had a third consecutive day of strength Tuesday as short-covering and new buying interest took place. Traders have turned more optimistic over continued demand after the negative impact of increased tariffs had been digested. Traders feel international demand may not be affected much for the time being. The market may trade mixed Wednesday as traders begin to position themselves ahead of the Cattle on Feed report that will be released Thursday. The average estimate for on-feed numbers on April 1 is 98.3% of a year ago. Placements in March are estimated at 103.7% with marketings at 100.7%. The expectation for the increase in placements is due to analysts comparing this year to the low placements of March 2024. Boxed beef prices were lower Tuesday with choice down $0.20 and select down $0.61. The May and August feeder cattle contracts closed their gap on Tuesday, with later contracts not far from accomplishing the task.

Hogs were able to extend minor gains Tuesday, except for the July contract. Packers were aggressive as they purchased 7,837 head and bid an average of $3.85 higher to obtain them. Pork cutouts did not fare as well, with a decline of $1.05. It seems rare lately that both cash and cutouts can move higher in tandem. This choppiness is what is limiting the upside price potential. Slaughter continues to remain strong, indicating demand is good and packers need to satisfy that demand. Cash is expected to be higher Wednesday as packers will purchase more aggressively ahead of the Easter weekend.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures have chart gaps above the market that need to be filled. Gaps are generally filled during the life of the contract.	1)	Feeder cattle futures left chart gaps below the market in recent days. These gaps may be filled ahead of the Cattle on Feed report and the extended weekend.
2)	Traders feel both domestic and international beef demand may remain strong. Fears of a recession have subsided for the time being.	2)	Cash is expected to be no better than steady this week, with a possibility of lower prices.
3)	Hog futures have made an impressive rebound from the lows as traders digested the tariff news and futures corrected from being oversold.	3)	Hog futures have corrected from being oversold and are now somewhat in line with cash. This may leave the upside price potential limited.
4)	Packers should be active buyers Wednesday at higher prices as they purchase more hogs to complete most of their needs for the week.	4)	Hog futures have regained recent losses and closed chart gaps. Futures may develop a sideways pattern.

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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