DTN Early Word Livestock Comments

Cattle: Lower. Futures: Lower. Live Equiv: $190.40 +0.02*

Hogs: Lower. Futures: Mixed. Lean Equiv: $115.24 +$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:

Cattle futures could not find further buying interest after Northern cattle traded $4.00 lower than last week. Southern cattle continue to trade $2.00 lower with hopes for stronger price evaporating. Boxed beef showed no solid support with choice up $0.26 and select down $0.15. Feedlot wanted to move cattle and packers saw their willingness to take a lower price. Cattle supplies are expected to tighten as the year progresses, but USDA estimated increased beef production on the World Agricultural Supply and Demand (WASDE) report Wednesday compared to their February estimate. They increased their estimate of beef production 195 million pounds totaling 27.570 billion pounds. However, this would be 367 million pounds less than 2021. The increased the average price estimate to $139.50 per cwt, up $2.00 from February.

Hogs were down generally from the get-go Wednesday morning. Traders looked at what was happening in other commodities and decided it was not the day to be aggressive buyers. There had been some anticipation of lower cash after two consecutive days of strength and that is want the market got. The National Direct afternoon report showed price down $0.49. That loss paled in comparison to cutouts increased $2.34. Some futures buying was evident, bringing futures off their lows but not enough to move to positive territory. Hog supplies are expected to tighten as the year progresses. USDA reduced their pork production estimate 65 million pounds from February to a total of 27.315 billion pounds. The average price estimate was raised $6.00 per cwt to $71.00 on a live equivalent basis. Saturday hog slaughter is estimated at 101,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle futures have lower cash already factored in, which should stabilize prices for the rest of the week.	1)	Corn futures are back up overnight, which may keep pressure on the cattle complex.
2)	Slaughter pace is strong, which should keep marketings current. Packers will need cattle to maintain the pace.	2)	Cash cattle traded lower than expected this week, which will limit any rebound of futures prices. There is already concern over lower prices next week.
3)	A strong weekly export report for pork Thursday would provide support to the market.	3)	Hog futures may be stabilizing at best for the time being. Prices may have corrected to where they should be under current fundamentals.
4)	Funds remain long in the hog market and may add to their positions on this price dip.	4)	Hog futures have a head and shoulders technical formation that projects over $8.00 lower than where the market currently is and would nearly close the chart gap in April.

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For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.

Join DTN Lead Analyst, Todd Hultman, at 12:30 p.m. CST on Wednesday, March 9, as we take a look at USDA's new estimates and what they mean for the market. We'll also look at the market's own clues to help understand what is driving today's prices. Register for the webinar here: https://ag.dtn.com/…

Robin Schmahl can be reached at rschmahl@agdairy.com

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