DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $193.99 -0.87*

Hogs: Lower Futures: Mixed Lean Equiv: $131.75 -$0.18**

*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:

The uptrend in cattle futures remains intact. Even though there has been anticipation of high cash cattle trade again this week, traders many times seem surprised when it happens resulting in a bump in futures. The reason for this is traders are exercising caution rather than trying to anticipate higher prices in the nearby month. Later months are anticipating higher prices following a seasonality. There is caution due to boxed beef prices not showing consistent strength from week to week. Wednesday, boxed beef was lower with choice down $1.51 and select down $1.16. Limited trade took place in the North about $2.00 higher. Southern cattle were untested. Cash traded is expected to be active Thursday. Weekly export sales may have an influence on trading activity.

October hogs shined Wednesday as they are slowing, closing the gap between it and August. It is in not expected that October will continue to increase to the same price where August will go off the board Friday, but it will likely reduce the gap to some extent. October made and held a new contract high Wednesday. The National Direct Afternoon Hog report showed cash up $1.35. Higher cash is not expected Thursday. Cutouts slipped $0.18 Wednesday, causing some minor concern over weakness the past two days. Weekly exports sales will be important to maintain the trend. Saturday slaughter is estimated at 22,000 head.

	BULL SIDE		BEAR SIDE
1)	Initial light trading activity Wednesday for Northern cattle points to higher cash this week.	1)	Cattle supplies remain readily available to the market currently which may limit upside price potential in the near term.
2)	The uptrend for cattle futures remains intact. Traders are bullish on price later in the year.	2)	Boxed beef prices are struggling, holding in somewhat of a sideways price range.
3)	October hog futures moved to and held a new contract high Wednesday as price narrows the spread between it and August.	3)	Despite continued talk of tighter hog numbers, packers only need to bid higher two days out of the week to obtain sufficient supply from the country. Hogs remain available.
4)	Pork cutouts have showed minor losses the past two days and if the pattern holds of the past few weeks, cutouts should show strength Thursday.	4)	October and December hold chart gaps way below the current market that may be filled before the contacts go 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.