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:

Feedlots proclaimed a victory with higher cash Thursday. The online fed cattle auction posted no sales with packer bids up to $138.50 with reserve prices ranging from $140 in the south to $144 in the north, but cattle did trade in the country with live cattle in the north trading $1.00 higher and dressed cattle up to $2.00 higher. This should carry through Friday. The grain markets seem to have factored in much of the prospective planting report which may temper some of the exuberance of grain prices. Boxed beef did very well Thursday with choice up $1.35 and select up $4.88.

Hogs were the recipients of the buy-the-rumor, sell-the-fact mentality. Futures gapped higher on the opening making new contract highs, but quickly retreated as long positions were liquidated. Unfortunately, chart gaps were not closed on the downside that remain from last week. These may be closed before a price rebound might take place. Packers were not in dire need of purchasing hogs yesterday with the National Direct Afternoon Hog report showing cash down $2.61. However, this was more than offset by cutouts showing a gain of $4.00. Once the liquidation phase is complete, stronger cash and futures may be seen again as hog supply will continue to tighten. Saturday slaughter is estimated at 62,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash trading higher and strong boxed beef should provide support to futures.	1)	Live cattle futures could not rebound even though cash traded higher. Traders are skeptical of continued price strength.
2)	Demand seems to be strengthening heading into April. This may support prices keeping the uptrend of futures intact for the time being.	2)	Lower planted corn acreage might mean continued higher feed prices. This might mean less profitability resulting in cattle moving to the market quickly when ready without feedlots exercising much bargaining power.
3)	Hog fundamentals are bullish and are not going to change based on the numbers released of the hogs and pigs report. Packers may have their work cut out for them finding sufficient hogs for demand.	3)	Hog futures may close the chart gaps looming below the market. That could potentially take place Friday.
4)	Once the charts gaps are filled, traders may step back into the market repositioning themselves for the long haul.	4)	Packers have not been aggressive with their bids this week with the same expected Friday. Much of the business for the week has likely been accomplished.

**

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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