DTN Early Word Opening Livestock

Cattle Paper Set to Open Mixed as Traders Cautiously Await Cash News

John Harrington
By  John Harrington , DTN Livestock Analyst
(DTN file photo)

Cattle: Steady-$2 HR Futures: Mixed Live Equiv: $145.02 - .66*

Hogs: $1-2 HR Futures: 50-100 HR Lean Equiv: $ 86.89 + .39**

* based on formula estimating live cattle equivalent of gross packer revenue

** based on formula estimating lean hog equivalent of gross packer revenue


Cattle buyers and sellers are likely to resume basic positions defined on Wednesday. That means live bids of $110 and asking prices around $117 to $118. If neither side blinks, significant trade volume will once again be delayed until Friday. Live and feeder futures should open on a mixed basis, thanks to a combination of follow-through selling and short-covering tied to large cash premiums.

The cash hog trade remains full of bullish potential. Despite another round of strong bids at midweek, we just didn't move that many barrows and gilts on a negotiated basis. Accordingly, we expect buyers to keep pushing higher Thursday morning with bids $1 to $2 higher. Processing margins continue to narrow with the cost of live inventory rising at a faster rate than carcass value. Lean futures should open moderately higher thanks to bullish momentum and positive fundamentals.

1) Though cattle buyers generally remained cautious at midweek, we did see a few regional bids in the North at $183, dangerously close to fully steady. This seems like a good sign that packers remain cattle-hungry. 1)

The stubbornness of live cattle discounts in the face impressive cash feedlot strength underscores how worried traders remain about the awkward mix ahead of large fed supplies and faltering midsummer beef demand.


The discounted structure of the live cattle futures market should encourage feedlot managers to be very aggressive in their marketings and successfully maintain current and maximum bargaining power.


Beef cutouts closed significant lower Wednesday with midweek demand described as no better than "light to moderate" demand.

3) The cash hog trade continues to surge higher as short-bought packers just keep chasing smaller and smaller country runs. 3)

For the week ending June 9, U.S. hatcheries set 233 million eggs in incubators; up 3% from a year ago. At the same time, chicks placed totaled 189 million chicks, up 3% from 2017.

4) Closing sharply higher for the second consecutive session, spot apparent July lean hogs stretched as high as $83.30 on Wednesday before closing at $82.77. Clearly, midsummer bulls are eager to lead the cash market higher. 4)

July through October may be quickly becoming overbought, especially given the fact that the June 1 Hogs & Pigs report and new expansion news will be available in several weeks.


CATTLE: (Time) -- Following IHOP's big reveal that it was changing it's name- for now anyway -- to IHOb to promote the debut of its new burgers, fellow restaurants like Wendy's and Denny's took to social media on Monday to mock the rebrand. Now, Burger King has also joined in on the viral pettiness.

Taking a shot at IHOP's transition from a pancake to burger focus, the fast food joint changed its name to Pancake King on both Twitter and Facebook. Burger King does in fact serve pancakes for breakfast, but the dish is by no means what the chain is known for -- as is certainly the case for the burgers at the establishment formerly known as IHOP.

Of course, the Internet was in stitches over the shady switch-up. "I love that @BurgerKing changed their profile to 'Pancake King.' I am 100% here for all the fast food pettiness," tweeted one fan of the fast food beef. "Super size the petty!"

HOGS: (Hoosier Ag Thursday) -- Mexico is turning to the European Union and Latin America to offset any potential declines in U.S. pork imports. Mexico recently announced a 20 percent tariff on U.S. pork shoulders and legs starting next month in response to steel and aluminum tariffs placed on Mexico by the Trump administration. Mexican officials told Politico the nation will allow 350,000 tons of pork from all countries to ensure "that its consumers do not face shortages." Experts predict the quota will be quickly filled by the European Union and Latin America.

U.S. pork will still be able to compete under the quota but is expected to see a sharp loss in sales from the Mexican tariffs. The United States sent 25 percent of its total pork exports to Mexico last year. EU Agriculture Commissioner Phil Hogan said "if Trump does not want to do business, the EU is ready and willing."

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket


John Harrington