DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $196.99 -$1.65*

Hogs: Lower Futures: Lower Lean Equiv: $131.90 -$0.47**

*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:

Live cattle closed in line with where it has been throughout the week. Cash action at $1.00 lower in the South and $2.00 lower in the North kept trading activity subdued. Traders were thinking ahead to the Cattle on Feed and Cattle Inventory reports to be released Friday. The reports will be released after the close, providing much for traders to think about over the weekend. Estimates for cattle on feed as of July 1 are 101.1%, placements at 94.7%, and marketings at 102.0%. Boxed beef prices were again lower with choice down $2.77 and select down $1.72. Weekly export sales were good at 23,800 metric tons (mt) with China as one of the main buyers. However, export sales have not been the focus of the market.

Hog futures could not hold earlier positive gains except for front-month August. Price closed right in line with the index, where it will remain and move in tandem over the next three weeks until it finishes trading. Later contracts saw pressure due to cash weakness and weaker cutouts. Cash weakness was expected due to the market already having two days of strong prices. The National Direct Afternoon Hog report declined $2.98 with cutouts finishing the day down $0.47. Weekly export sales were good but not exceptional. The positive aspect was that China was again listed as a buyer. Futures may drift lower into the weekend. Saturday slaughter is estimated at 42,000 head.

	BULL SIDE		BEAR SIDE
1)	There is a consensus that the bi-annual Cattle Inventory report might show some bullish numbers.	1)	Lower boxed beef will keep pressure on the market. Beef demand is being impacted by inflation.
2)	Slaughter pace remains brisk, which may require packers to be more aggressive next week due to lighter buying activity this week.	2)	Trading will be affected by the anticipation of the reports today. The uncertainty of those reports may see futures mixed at best.
3)	August hogs are supported by strong cash and a rising index. This has pushed the price spread to October over $20.00. October may find support and narrow the gap.	3)	Now that 2 days of higher cash have been accomplished, hog futures may see pressure moving into the weekend.
4)	China has been a steady buyer in the export market, which may indicate they need more pork than has been projected.	4)	August hogs have gapped higher two days in a row. These gaps may be filled over the next three weeks before the contract goes off the board.

**

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.