DTN Early Word Livestock Comments

Cattle: Steady Futures: Lower Live Equiv: $201.91 -$0.88*

Hogs: Higher Futures: Mixed Lean Equiv: $87.38 +$1.68**

*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 selling pressure stemmed from lower cash that surfaced yesterday. Light trade took place at $2.00 to $3.00 lower. This may have set the direction for business today. Traders will be looking ahead to the Cattle of Feed report after the close, but the overriding influence will be cash trade. Weaker cash last week and again this week does not bode well for the market in the near term. Whatever the report says today will garner more reaction on Monday as traders will position themselves today in anticipation of what they feel the report will indicate. On feed is estimated at 96.8%, placements at 91.5%, and marketings at 94.7%. Weekly exports will have an influence as they are being released today delayed due to the holiday on Monday. Boxed beef closed mixed yesterday with choice down $2.57 with select up $1.83. Feeder cattle continued the liquidation phase with six consecutive days of lower lows with March posting the lowest close since October 17.

Hogs sold off as a reaction to continued cash weakness. Cutouts were higher Wednesday and again yesterday with a gain of $1.68, but that failed to provide support. February futures matched the previous lows from October 4 and rebounded slightly. Due to it being Friday, there is a strong chance the market will bounce today as some traders will take profits before the weekend. The National Direct Afternoon Hog report showed cash down $0.86 bringing the weighted average down to $70.35. There is concern over the volume of exports in the weekly report this morning. Saturday slaughter is estimated at 192,000.

	BULL SIDE		BEAR SIDE
1)	The Cattle on Feed report should continue to show a tightening cattle supply and potentially higher prices.	1)	Feeder cattle have been in a freefall unable to find support even from weaker corn prices. Recent auctions have seen lower prices as well.
2)	Live cattle futures seem to have lower cash factored in which could minimize further price pressure into the end of the week.	2)	Cash cattle trading lower again this week may indicate demand is slowing with packers less aggressive.
3)	February hogs held support bouncing slightly. This could trigger more short covering today as the market is oversold.	3)	Cash hogs have not been able to find support with continued weakness of the index pressuring futures.
4)	Packers seem to be slowing slaughter possibly in an effort to improve cutout values and margins.	4)	Packers continue to have no difficulty obtaining hogs to meet slaughter needs.

**

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 2023 DTN, LLC. All rights reserved.