DTN Early Word Livestock Comments

Cattle: Higher Futures: Higher Live Equiv: $270.95 -$0.65*

Hogs: Lower Futures: Mixed Lean Equiv: $122.28 +$1.58**

*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:

There was no information to impact the cattle market negatively Thursday. Traders became less enthusiastic and took a wait-and-see attitude rather than anticipating the cash cattle trade. There was some light activity reported late in the day at steady to $1.00 higher, but no sufficient volume to set prices for the week. The movement of futures this week could make a case for higher cash, while the weakness of boxed beef could support a lower cash trade. Boxed beef prices were mixed Thursday, with choice up $0.43 and select down $4.07. Weekly export sales were down significantly from the previous week with only 8,800 metric tons (mt) sold. High beef prices may be impacting international demand. Feeder cattle futures were the recipients of spread trading, resulting in weakness in the nearby contract and strength in 2026 contracts. Feeder cattle prices in the country remain strong with a tight supply.

Hog futures regained more of the losses from earlier in the week as traders maintained interest in buying the break. It may be difficult for futures to increase much further unless pork cutouts continue to increase. Futures are trying to find an equilibrium after the recent large decline. The cash market fell back Thursday with the National Daily Direct Afternoon report showing a decline of $2.02 on rather light volume. Pork cutouts gained $0.73 and are slowly trending higher. The weekly export sales were not very exciting at $17,100 mt, down 30% from the previous week.

	BULL SIDE		BEAR SIDE
1)	Light cash cattle trade Thursday may be repeated Friday at steady to $1.00 higher, maintaining the strong gains of last week. Futures should find further support.	1)	The cattle market may be at or near a top as the August contract maintains a significant discount in anticipation of weakness.
2)	August cattle futures hold a substantial discount to cash, which will require futures to increase if cash holds at the current level or higher.	2)	Boxed beef continues to show weakness, indicating demand has slowed. This could trigger liquidation.
3)	Traders decided the hog market was overdone to the downside and bought futures to move back in line with cash and to relieve the oversold technical status of he market.	3)	Hogs have rebounded after the recent weakness, but further gains may be limited without continued support from the cash market.
4)	Pork cutouts have been holding and may trend higher as the summer progresses. Demand is holding.	4)	Both domestic and international demand needs to improve or there will be limited upside potential for prices.

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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