DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $234.42 -1.98*

Hogs: Lower Futures: Lower Lean Equiv: $131.55 +4.31**

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

(The Live Cattle Equiv. 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:

It was a blood bath in nearly the entire commodity complex Thursday. No matter where you looked, futures were substantially lower. But grains and lean hogs were exceptionally lower with corn and hogs limit down. Soybeans made a historic one-day drop as selling erupted. The decline of grain futures did nothing the stem the selling tide. Generally, cattle would have benefited from such a severe price decline. Only feeder cattle were able to close higher in the 2022 contracts. The culmination of a number of issues triggered liquidation that will be difficult to recover from. Cash cattle held Thursday at an average of $4.00 higher in the North and $2.00 higher in the South, which should have provided some support, but when technical selling gripped the market, nothing else mattered. China was the second largest buyer of feed on the weekly export sales report, but that was offset by lower sales. Boxed beef continues to fall with choice cuts down $3.92 and select cuts down $2.72. I think we can confidently say the top is in the boxed beef market.

Hogs had extended price limits with July and August using all of it. Technical selling erupted as it did in other commodities, but heavy selling was also the result of plunging cash price. The National Direct Afternoon report showed a decline of $6.17. The fact that cutouts jumped $4.31 had no impact on the market. Neither did strong weekly exports sales at 29,300 metric tons except for the fact that China was not listed as a buyer. Price gaps were left in the charts for July through February contracts that will be filled at some point. One aspect that is typical of any market and seen vividly in the hog market, is that prices always fall faster than they increase. Saturday hog slaughter is projected at 62,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash cattle continued to hold steady Thursday as they had done so far this week.	1)	Boxed beef continues to decline, indicating the market has reached a top with demand slowing.
2)	Cattle weights are declining requiring more cattle to meet demand and indicating feedlots are current. This may keep cash strong even though boxed beef is lower.	2)	Substantially lower grain price could not stem the selling tide. Lower exports of beef could back up supply into the market.
3)	Hog futures left chart gaps Thursday that will need to be filled with the August contract also having one from way back at $116.25.	3)	Some pressure in the hogs came from the indication from China that they may cut back on commodity speculation and the fact that they were not buyers on the weekly Export Sales report.
4)	Export sales were good, indicating international demand for pork remains strong.	4)	Packers have pulled back, bidding lower for hogs due to the weakness of futures.

**

For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CDT. 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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