DTN Early Word Livestock Comments

Cattle: Steady. Futures: Mixed. Live Equiv: $196.07 +$1.10*

Hogs: Steady. Futures: Mixed. Lean Equiv: $113.90 -$0.32**

*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:

Feedlots decided they needed to move cattle at steady money rather than hold out for higher cash that might not have materialized anyway. This sets the stage for the rest of the business to be done yet this week. Steady cash is not bad, but it is not what was hoped. Packers are being able purchase what they need now and contract some for the next two weeks.

Boxed beef closed higher with choice up $1.63 and select up $1.35. Maybe boxed beef has not yet reached a plateau with consumer demand holding well. The February Cold Storage report showed total frozen beef supply at 532.5 million pounds, up 4% from February 2021. Weekly exports sales will be released Thursday and will hopefully be an improvement over last week. Estimate for Cattle on Feed report on Friday are 101.1% on feed, placements of 106.3%, and marketings at 104.3%

Hog futures were impressive again Wednesday with triple-digit gains through the October contract. Traders bought with both hands on the opening resulting in futures leaving charts gaps. These gaps will likely be back filled but new contract highs were easily accomplished turning the trend back up. The gains seemed to be a reaction to strong cash and cutouts on Tuesday. Again, this rally was not support by cash as the National Direct Afternoon report showed a decrease of $0.54. Cutouts were down $0.32. Pork in cold storage for February totaled 480.4 million pounds, down 1% from a year ago. Weekly export sales will be released Thursday. Saturday slaughter was not available.

	BULL SIDE		BEAR SIDE
1)	Steady cash cattle was not what was hoped but at least it was not lower and should be considered somewhat of a victory.	1)	Packers being able to purchase cattle at steady cash this week may dim the outlook for higher cash in the near term.
2)	The upcoming Cattle on Feed report could trigger some short covering pushing futures higher prior to the report and the weekend.	2)	Another week of low export sales could result in the market retesting the lows of earlier this month.
3)	Hogs establishing new contract highs should provide traders with confidence to buy and hold. The trend is their friend.	3)	Hog futures rallied without support of underlying cash and cutouts. This could result in a pullback Thursday.
4)	Pork demand is holding well despite the period of Lent when demand is not as strong. However, tighter supply points to higher prices.	4)	Chart gaps were left at the opening Thursday, which will be filled at some point.

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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.

Robin Schmahl can be reached at rschmahl@agdairy.com

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