DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $185.69 -$1.90*

Hogs: Steady Futures: Higher Lean Equiv: $96.86 +$2.48**

*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:

Southern cattle could not squeeze out any higher cash with prices at $155 and steady with the previous week. Northern dressed cattle traded upwards of $4.00 higher, but it failed to light a fire under the trade. December live cattle futures were only up $0.27 for the week. Traders seem to be very cautious over putting too much premium in the market. This may carry over Monday with trade likely choppy as traders wait for showlists, boxed beef prices and cash to determine direction. The bullishness of steady-to-higher cash was offset by somewhat lackluster boxed beef prices. Choice cuts were $3.65 lower with select cuts down $0.44. There remains concern that demand will slow through the end of the year, which may impact cash cattle trade. The Commitment of Traders report showed funds as sellers of 2,105 futures, reducing their net-long position to 58,745 contracts. Monday is the first notice day for December live cattle.

Hog futures put in a strong day in February, April, and May contracts Friday, posting triple-digit gains and closing not far off the recent high of Nov. 17. The exception was front-month December as it has 1 1/2 weeks remaining to trade. It will need to remain close to the index that was projected at $82.87 with futures right in line. A gain of $2.42 in cutouts likely provided support for futures as the outlook for demand may be improving. However, support did not come from cash as the National Direct Afternoon Hog report showed a decline of $3.04. The Commitment of Traders report selling heavily with long futures liquidated to the tune of 12,929 contracts. This moved the net-long positions to 38,818 contracts. This likely flipflopped last week, which we will see on the next report.

	BULL SIDE		BEAR SIDE
1)	Live cattle are in an overall uptrend and are poised to move to new contract highs.	1)	Even with stronger cash, live cattle have not been able to move to new contract highs.
2)	Cash cattle traded steady to higher last week with feedlots looking for more this week. Strong demand keeps packers aggressive.	2)	Traders remained cautious last week even though cash was steady to higher. The same might be true Monday as they wait to see showlists and demand.
3)	Hog futures have regained all losses from the past 1 1/2 weeks with June and later contracts making new highs.	3)	Packers may not be very aggressively bidding for hogs Monday as they assess pork movement over the weekend.
4)	Demand is expected to improve through the month and the strength of cutouts Friday may be the beginning.	4)	Cumulative pork export sales this year are at the slowest pace since 2018, totaling 1.523 million metric tons (mmt). If demand does not improve, upside price potential will be limited.

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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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