DTN Early Word Livestock Comments

Cattle: Lower Futures: Higher Live Equiv: $225.77 -2.14*

Hogs: Lower Futures: Mixed Lean Equiv: $114.14 +4.16**

* 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 turned higher Wednesday as traders seem to be anticipating a friendly Cattle on Feed report. The expectation is for tightening cattle numbers as we move into next year. The inability of futures to push below support on Monday and the upcoming report triggered short-covering and positioning ahead of the report. More confidence in the economy with strength in other commodities as a result, provided some support as well. Cash cattle traded Wednesday with the South trading general steady with last week at $124 while the North averaged $1.00 lower at $198 on a dressed basis. Boxed beef price fell again Wednesday with choice cuts down $3.54 and select cuts down $2.51. Weekly exports sales will be released Thursday but may not have much influence on the market as traders focus on the Cattle on Feed report Friday.

Hogs could not follow the strength of cattle, but futures did benefit from some spillover activity, limiting losses. Cash continued to decline with the National Direct Afternoon report showing a loss of $0.98. However, cutouts exploded higher posting a gain of $4.16. The quarterly Hogs & Pigs report will be released Friday afternoon. All hogs and pigs on Sept. 1 are expected at 98.3%. Kept for breeding at 98.9% and kept for marketing at 98.2%. Weekly export sales will be released Thursday and like cattle, it may not have much impact as traders look ahead to the report on Friday. But exports will be watched to see if China remains active. Saturday slaughter is estimated at 235,000 head. There were numerous plants that had problems this week, which reduced schedules. Saturday will be a make-up day. This number might change due to two plants that were going to increase kill on Saturday, indicating they might not after all.

	BULL SIDE		BEAR SIDE
1)	Cattle futures rejected the lows early this week with further buying expected ahead of the Cattle on Feed report Friday.	1)	Cattle futures fell apart after the last Cattle of Feed report even though it was friendly. This report might not have much impact as traders are concerned over demand weakness.
2)	Estimates for the report indicate tighter cattle supplies could develop through the end of the year and into next year.	2)	Cash cattle trading steady to $1 lower has set the stage for the week. Packers will not bid up due to falling boxed beef.
3)	Hogs futures are moving in a sideways range and may be building support on the potential that prices might be overdone to the downside.	3)	Hogs continue to maintain a large discount to cash, leaving traders somewhat bearish.
4)	Pork exports continue to do well even through China has slowed pork purchases. If they are a buyer on the report Thursday, further support could surface.	4)	Futures have been unable to rebound much after the large losses of about two weeks ago. Cash continues to decline as demand weakness remains a concern.

**

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.