DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv $200.43 -$1.02*

Hogs: Steady Futures: Higher Lean Equiv: $115.91 +1.07**

*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:

Cash cattle continued higher with light activity taking place Wednesday at the same level as it did on Tuesday with South trade $1.00 higher and North trade $3.00 to $4.00 higher. Packers have been aggressive early this week looking to procure needed supplies even though they had some already forward contracted. Unfortunately, boxed beef did not close higher with choice down $1.11 and select down $2.68. June live Cattle futures closed at the highest level since February 24th. Feeder cattle futures were able to close the chart gaps on strength. Weekly export sales will need to be strong to keep the momentum going.

Hog futures were under pressure as liquidation erupted likely based on the disappointment of cutouts not being able to continue to trend higher this week. Although the price on the National Direct Afternoon report gained $0.41 and pork cutouts increased $1.37, that could not overcome the selling pressure that hit sell stops and kept the market under pressure. Weekly export sales need to improve over last week supported by continued strength of cutouts in order to provide traders with confidence to buy back into the market. Projected Saturday slaughter was unable to be obtained at this time.

	BULL SIDE		BEAR SIDE
1)	Futures rode the wave of strong cash adjusting higher as well as adding some premium for expected further cash strength.	1)	April live cattle now has a premium to cash with only a week remaining before the contract settles to cash.
2)	Lower overnight corn futures may translate over into further strength in the cattle complex.	2)	Feeder cattle fell back from the highs as grain prices are not getting less expensive.
3)	Higher cash hogs and higher cutouts might provide traders with the confidence to buy back into the market with anticipation of further strength of cutouts.	3)	Traders have not yet been able to see consistent strength in cutouts which leaves concern over demand.
4)	Strong weekly export sales might allow futures to regain the losses from Wednesday.	4)	May hogs continue to converge to cash, eliminating some of the large premium it contains. This may continue Thursday.

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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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