DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $198.39 +$0.79*

Hogs: Lower Futures: Mixed Lean Equiv: $129.07 +$0.22**

* 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:

Cattle futures got a boost Thursday from lower gran prices again. Support also came from higher boxed beef prices. Choice cuts gained $0.90 with select cuts up $1.00. However, cash activity was not what we wanted to see as business was done at lower prices. Cattle in the North sold on an average $3.00 lower than last week with cattle in the South $1.00 lower. That impact was mitigated due to an acceptable weekly export sales report and the fact that the June Cold Storage report was to be released after the close. Cold storage numbers may provide some support to the market Friday as beef in cold storage in June was the lowest level over the past seven years. However, traders may remain cautious as they look ahead to the Cattle on Feed report to be released after the close Friday. The estimates for the report are for placements at 95.9%, marketings at 102.1% and on-feed numbers at 99% of last year. Traders have had overnight to digest the Cold Storage report and will have the weekend to digest the Cattle on Feed report.

The cash hog price did not fair very well Thursday as the price on the National Direct Afternoon report was down $1.47. Packers are again following the pattern with stronger cash prices earlier in the week and weaker prices later. The weekly export sales report was somewhat bearish as China cancelled pork sales instead of being a buyer, putting some pressure on futures. But, thankfully, they closed off their lows. This could indicate the market will maintain its uptrend. The June Cold Storage report may provide some support as pork supply was down 4% from May and down 4% from June 2020. Pork bellies supply actually increased, but still remains 32% below a year ago. Cutouts gained slightly with an increase of $0.22. Saturday hog slaughter is projected at 31,000 head.

	BULL SIDE		BEAR SIDE
1)	A good export sales report and lower grain prices should provide further support Friday.	1)	Cash cattle trading lower this week does not paint a positive picture for much upside potential. .
2)	Cattle futures negated the losses of the past week, providing technical support as the market looks ahead to the Cattle on Feed report Friday.	2)	If actual numbers on the Cattle on Feed report do not meet estimates, upside price potential may be limited.
3)	Even though hog futures closed lower, contracts did establish higher highs Thursday, keeping the uptrend intact.	3)	China was not a buyer listed on the weekly export sales report, increasing the fear their hog numbers have increased, leaving them less dependent on imports.
4)	The Cold Storage report was supportive to the overall market as inventory continues to remain below year earlier levels.	4)	Packers are not expected to be aggressive Friday as general supplies are already in hand for the week.

**

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

(c) Copyright 2021 DTN, LLC. All rights reserved.