DTN Early Word Livestock Comments

Cattle: Steady. Futures: Mixed. Live Equiv: $199.81 +$1.88*

Hogs: Higher. Futures: Higher. Lean Equiv: $111.26 -$0.22**

*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 were uncertain of what to do as Friday's report is history and there was some indication of steady cash with last week. Cash trading showed some light activity taking place at steady cash. Generally, once some trading takes place, it sets the stage for the rest of the week. Any increase from steady prices would certainly be a victory. Boxed beef was higher with choice up $2.04 and select up $2.62. One would think packers would need to step up a little to keep full slaughter schedules due to strong demand and higher boxed beef. Weekly export sales may provide some market direction.

Hog traders were focused on the Quarterly Hogs and Pigs report to be released at the end of Wednesday. This prompted spread trading and positioning ahead of the report. The report was bullish, which should turn the market higher Thursday. All hogs and pigs were down 2% from March 1, 2021, and slightly below expectations of 98.8%. Hogs kept for breeding were 98%, down 2% from a year earlier with expectations of 100.1%. Marketings were 98% of a year ago, down slightly from expectations of 98.7%. This is a bullish report and should result in higher trade today keeping the uptrend intact. The question is whether some of this report has already been factored in. The National Direct Afternoon Hog report showed cash up $1.00. Cutouts slipped further with a decline of $0.22. If weekly export sales or good along with this report, the market should see some strength. Saturday slaughter is estimated at 62,000 head.

	BULL SIDE		BEAR SIDE
1)	Even if cash cattle trade steady this week, it should keep the uptrend intact due to steady demand.	1)	Initial light cash trade may set the stage for the rest of the week indicating steady cash at best, limiting upside potential.
2)	The recent trend is up with higher cattle numbers on Friday's report already factored in. Traders may have confidence to buy and hold for the near term.	2)	If the Quarterly Grain Stocks report is bullish Thursday, higher grain prices could increase the desire of feedlots to move cattle at steady or even lower prices.
3)	The Hogs and Pigs report was bullish and could push futures to new highs.	3)	Hog futures may have much of this report already factored in which may move the market in a sideways pattern in the near term.
4)	The report indicates hogs ready for marketing and the number of breeding animals is contracting more than anticipated. This should support price.	4)	Chart gaps remain about $4.00 under the current market, which may need to be filled before the uptrend can resume.

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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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