DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $192.67 +$1.49*

Hogs: Steady Futures: Higher Lean Equiv: $111.84 -$0.31**

*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:

Cattle fell substantially early in trading but were able to recover significantly by the end of Monday. It really did not seem that lower corn futures were a large influence as corn futures were significantly lower at the beginning of cattle trading, yet they still opened lower and fell from there before finding support. June live cattle fell to support at the low set on March 4 on demand concerns and the potential for lower cash as packers may not need to be very aggressive buyers this week. However, showlists are mixed and there are a lot of cattle being slaughtered at present. Boxed beef was mixed with choice up $3.85 and select down $1.93. Choice is now running below last year and the three-year average, indicating consumers might be backing away from higher beef cuts due to the impact of inflation. Packers may not be aggressive with cash trading not likely until the second half of the week.

Hogs suffered substantial losses. Futures first gapped lower and then remained under pressure throughout the day. June fell below last week's low while July matched the low. It was a bit surprising that futures did not rebound as packers became aggressive, looking for hogs to maintain the strong slaughter pace. The National Direct Afternoon Hog report showed a gain of $4.85. However, traders are focused on cutouts, which showed a decline of $0.31. The volume of hogs purchased last week and the aggressive nature of packers seem to indicate demand might be increasing, but that has not yet been reflected in cutouts.

	BULL SIDE		BEAR SIDE
1)	The strong rebound from the lows Monday might indicate selling may have been overdone, bringing buyers back into the market.	1)	Cattle have not been able to rebound in reaction to lower corn prices.
2)	Cumulative beef exports sales this year are running slightly higher than last year and the highest on record for this time of year.	2)	Traders are concerned over feed demand as food and fuel prices rise. There are some who think cash might decline $10 over the next month, which is why June futures hold a discount.
3)	Hog futures left chart gaps on the open Monday that need to be filled on the upside.	3)	March pork exports were down 25.3% from March 2021, totaling 544.17 million pounds. China purchases during the March were small at only 41.5 million pounds.
4)	Strong cash means packers need hogs, which may indicate lower cutouts have spurred consumer interest.	4)	Cutouts continue to search for a bottom, leaving the market in a bearish posture.

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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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