DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $198.69 +$1.00*

Hogs: Higher Futures: Lower Lean Equiv: $129.96 -$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:

Cattle held well Monday in the face of higher corn futures. There is limited anticipation for higher cash cattle trade this week but the discount to cash in August live cattle may support futures. Cash cattle did not trade Monday and are not expected to see much activity develop Tuesday. Boxed beef was higher with choice up $1.64 and select up $0.87. That may be about it for strength of boxed beef for the week as demand remains a concern and prices may drift after weekend movement is replenished. The General Administration of Customs reports China's beef imports for June from any country are up 42.7% year-over-year at 230,000 tons with year-to-date imports up 1.7% at 1.15 million tons. The Commitment of Traders report showed funds buying 3,783 contracts of live cattle, bringing their net-long positions to 18,080 contracts.

Hogs pushed higher with price gapping higher Monday, finally closing above price resistance. Strong cutouts last week triggered the buying interest. Monday, both cash and cutouts were weaker, which may put some pressure back on the market. The National Direct Afternoon report showed cash down $5.52. Cutouts were down $0.22, breaking a stretch of five days of gains. This will likely be reflected in trading Tuesday with the possibility of the gap left in August on Monday being closed. The General Administration of Customs reports China's pork imports from any country for June were down 64.2% year-over-year at 120,000 tons with year-to-date imports down 65.1% at 800,000 tons. The Commitment of Traders report showed funds as buyers of 11,449 contracts, bringing their net-long positions to 39,934 contracts.

	BULL SIDE		BEAR SIDE
1)	The August live cattle discount to cash should provide support to the market if trade is accomplished at steady money with last week.	1)	There is hope for cash cattle to trade no worse than steady, but a strong possibility it may trade lower. Packers have some cattle already contracted.
2)	Lower grain prices should provide strength for feeder cattle with spillover buying interest for cattle.	2)	Slowing demand is a concern and the potential for further slowing a strong possibility. Boxed beef has been struggling.
3)	Hogs gapped higher on strong cutouts last week, pushing August futures to close above price resistance. This could provide confidence to traders to increase their long positions.	3)	August hog futures left a gap on the open Monday that will be closed possibly Tuesday as traders react to the large cash decline of Monday.
4)	The pattern has been for cash to be higher on Tuesdays as packers become more aggressive with hog purchases.	4)	China's imports of pork are substantially lower than a year ago. They continue to rebuild their hog herd.

**

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

(c) Copyright 2022 DTN, LLC. All rights reserved.