DTN Early Word Livestock Comments

Cattle: Steady. Futures: Mixed. Live Equiv: $191.56 +$1.16*

Hogs: Steady. Futures: Higher. Lean Equiv: $111.70 -$3.54**

*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 just could not overcome the rebound of grain prices Thursday. Weaker cash trade for the week did not provide support to the complex with Southern cattle $2.00 lower and Northern cattle $4.00 lower. The positive aspect yesterday was the gain in boxed beef prices of $1.24 for choice and a gain of $2.58 for select. However, traders are wary of the possibility that a low has been reached in boxed beef. It will take a few consistent days of gains to provide confidence that a low has been reached. Weekly export sales Thursday were good at 27,500 mt and a marketing-year high. China was the number one buyer with a substantially higher volume than their average weekly purchase. Technically, the cattle market may retest the recent lows.

Higher cash was seen again Thursday for hogs, which has been a bit unusual moving closer to the end of the week. The National Direct Afternoon report showed an increase of $2.36. However, the decline of cutouts by $3.54 offset the cash gain putting pressure on the April contract. There was also some spread trading taking place as traders want to get back into the market but on a less risky basis. Later contracts showed gains as the potential for tighter hog supplies as the year progresses remains alive and well. Weekly exports sales were not as good as hoped but were still respectable at 25,400 mt. China was again needing pork being the second largest buyer for the week. Saturday slaughter is estimated at 101,000 head.

	BULL SIDE		BEAR SIDE
1)	Export sales were strong indicating international interest in beef should keep supply from backing up in the country.	1)	Cash weakness will keep traders less willing to buy into the market anytime soon. Futures anticipate lower cash again next week.
2)	Grain futures seem to be settling down with generally lower overnight trade, which will probably result in a rebound of cattle futures.	2)	Grain prices are high with no anticipation of that changing anytime soon. Feedlots will be willing to move cattle sooner rather than later.
3)	Higher cash Thursday near the end of the week is always a good sign that packers need to remain aggressive. Market ready supplies may be increasingly difficult to find.	3)	Technically, hog futures may see further weakness, which may keep traders cautious.
4)	If futures can close higher Friday, they may the close the charts gaps and retest the highs of last week.	4)	Hog slaughter continues to struggle with lower numbers than usual. This may be an indication of slower demand with packers keeping slaughter pace in line with product movement.

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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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