DTN Early Word Livestock Comments

Cattle: Steady Futures: Lower Live Equiv: $197.57 -1.20*

Hogs: Steady Futures: Mixed Lean Equiv: $128.61 +1.91**

* 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:

Live cattle futures moved within a range of $1.00 to $1.50 Monday, which can be considered somewhat eventful from the volatility we have become accustomed to. The positive aspect is that cattle were able to close mixed while many other outside markets melted down because of renewed fears of the surge in cases of the COVID variant. There were fears this could hinder the growth of the economy. However, cattle prices held well even though the cash market was not tested, and boxed beef prices continue to fall. Showlists are smaller this week with asking prices higher. Packers are not expected to be aggressive or possibly even to bid at steady prices with last week as they have some supply of cattle already in hand. Choice cuts declined $1.45 and select cuts declined $2.30. The Commitment of Traders report showed funds as net sellers of 7,767 futures contracts reducing their net-long positions to 55,114 contracts.

Hog futures took it on the chin more in line with the broad selling in the outside markets Monday. The recent uptrend is at risk of stalling unless packers become more aggressive in cash. The National Direct Afternoon report showed cash down $1.08. The news of African swine fever in Germany quickly was absorbed and considered as something to be monitored rather than a major market mover. Cutouts increased $1.91, providing some support that could be a factor in Tuesday's trade. The Commitment of Traders report showed funds as net buyers of 2,239 futures contracts increasing their net-long positions to 69,446 contracts.

	BULL SIDE		BEAR SIDE
1)	Cattle futures performed well despite the concern of the increase of COVID variant cases, which caused other markets to plummet.	1)	Cattle futures had little to go on other than somewhat steady corn prices. With corn strong again overnight, some pressure may return.
2)	Smaller showlists may indicate feedlots are current and may hold out for higher prices.	2)	Boxed beef shows no sign of stability, reducing packer profits. This may leave them less aggressive in the cash market this week.
3)	Hog futures suffered losses, but the uptrend still have not been negated. Packers may need to be more aggressive to meet demand.	3)	The recent uptrend of futures is at risk of stalling unless cash prices begin to rise soon.
4)	Dow futures indicate a stronger opening after the sell-off Monday. This could allow for some support.	4)	China pulling back from importing pork may back up supply into the domestic market.

**

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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