DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $196.41 -$1.66*

Hogs: Higher Futures: Higher Lean Equiv: $112.93 -$0.04**

*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 traded steady Wednesday with what had already taken place this week as packers were able to increase purchases as feedlots wanted to move cattle. Increasing grain prices provided some pressure. Packers have been purchasing some cattle ahead for the next few weeks in their attempt to not be short bought in the marketplace. It seems supply of market-ready cattle is a little short for the time being. The online cattle exchange showed no cattle sold in Wednesday's auction with bids of $139.50 not enough to generate business. Boxed beef was lower with choice down $2.26 and select down $3.91. Weekly export sales will be released Thursday morning, which could provide some direction. Feeder cattle were under extreme pressure due to corn futures pushing to new highs again. More than 60 tons of ground beef was recalled that had been distributed by Lakeside Refrigerated Services based in New Jersey. This is the third largest recall since the beginning of 2021.

Not much else can be said about hogs other than futures have been unable to find a bottom. Hog supplies are lighter, but consumer demand is lacking, leaving cutouts floundering. The bright spot was that cash was higher for the second consecutive day with the National Direct Afternoon Hog report up $1.70. Cutouts could not find any strength with price down $0.04. the May contract continues to eliminate premium as it moves to converge with cash, taking other contracts down with it. Some spread trading took place as later contracts closed higher. Weekly export sales will be released Thursday and will hopefully be much better than last week.

	BULL SIDE		BEAR SIDE
1)	Cash cattle have not traded as high as desired, but steady to $2.00 higher than last week shows packers need cattle.	1)	Continued escalating corn prices may keep pressure on the cattle complex as the cost of production continues to rise. Cattle will be moved as quickly as possible.
2)	Chart gaps remain above the market that need to be filled. Steady to higher cash may allow this to happen sooner rather than later.	2)	The weakness of boxed beef may indicate consumer demand is slowing as inflation impacts buying power.
3)	There was some strength in later hog contracts Wednesday due to the large discount held to closer months. The spread may continue narrow.	3)	Demand for pork remains somewhat lackluster, leaving cutouts floundering. This keeps pressure on hog futures.
4)	Packers needed hogs and paid more to get them the past two days. Export demand might be improving with potential increasing domestic demand.	4)	June hog futures are testing support established at the beginning of March. A break below that level could trigger further selling.

**

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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