DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $203.43 -1.07*

Hogs: Lower Futures: Mixed Lean Equiv: $ 90.47 +2.34**

*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:

Traders remained aggressive buyers in the cattle complex Monday, but without the gusto of those who are confident over the level of higher cash that may be seen again this week. No cash business was done Monday nor was it anticipated. Showlists were distributed and showed more cattle this week than the past few weeks. Bids and offers have not been established. Feedlots may be more willing to take advantage of higher prices as the strength seen over the past weeks will not last forever. Packers are adding to the ownership of differed cattle positioning themselves for the disruption of the holiday period. Boxed beef declined with choice down $1.83 and select down $0.79. The Commitment of Traders report showed funds as net buyers of 9,484 contracts bringing their net-long positions to 78,527 contracts.

Hog futures plummeted Monday with February taking the brunt of the selling pressure falling $3.27. The market just could not overcome the large decline of cutouts on Friday and then weakness of cash as the day developed. The National Direct Afternoon report showed price down $1.29. However, cutouts were able to rebound to some extent gaining $2.34. Both December and February left chart gaps on the open Monday leaving something for technical traders to ponder. The Commitment of Traders report showed funds were buyers of 897 contracts increasing their net-long positions to 56,373 contracts.

	BULL SIDE		BEAR SIDE
1)	Traders anticipate higher cash this week and slowly increased their long positions Monday.	1)	The boycott of the 2022 Olympics in Beijing could have an impact on beef exports due to their statement that they will take resolute countermeasures if it proceeds.
2)	Showlists are larger but feedlots will expect higher cash as they know packers still have not forward contracted a large amount of cattle.	2)	Packers are slowly purchasing cattle ahead in preparation of the holidays. This may result in them holding back on the amount they may be willing to pay for cattle.
3)	Chart gaps were left on the open Monday in the December and February hog contracts. These gaps will likely be filled soon.	3)	Packers showed they had sufficient supply of hogs purchased last week by dropping cash bids Monday. The same might be true again Tuesday.
4)	Prices have reached about to 50% retracement level, which could bring technical traders back into the market to buy more aggressively.	4)	The boycott of the 2022 Olympics in Beijing could have an impact on pork exports due to their statement that they will take resolute countermeasures if it proceeds.

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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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