DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $209.53 +$0.53*

Hogs: Lower Futures: Mixed Lean Equiv: $87.58+0.44**

*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:

There had been some hope cattle would shrug off the mixed cash trade that had developed on Wednesday, but such was not the case. Although cash trading activity was rather light again Thursday, it still remained mixed with prices averaging $1.00 lower in the South and $1.00 higher in the North. Anything else that trades the rest of the week will likely follow the same pattern. Boxed beef continues to run mixed with choice up $1.48 and select down $0.93. With beef packer margins below last year and the three-year average. Packers will attempt to improve those margins by trying to purchase cattle at reduced prices. Weekly export sales were 5% better than last week at 18,600 MT, but still ran lower than desired to provide strong support under the market. Total beef in inventory for the month of February was 500.2 million pounds, down 6% from a year earlier.

Hog futures were likely the recipients of some short-covering after new lows again Thursday. With the market being oversold, traders might decide to buy back some of their sold positions ahead of the weekend. The Quarterly Hogs & Pigs report is also on the horizon for next week, which may result in some positioning ahead of it. Cutouts showed some strength yesterday with a gain of $0.44, making it the second day this week cutouts were higher. Slaughter continues to remain strong as market-ready hogs continue to be available. Weekly exports sales were good at 38,000 MT and 7% above the previous week. China was not a top buyer. Cash was lower on the National Direct Afternoon report with a decline of $0.92. The February Cold Storage report was about as expected with total pork in inventory at 521.2 million pounds, up 9% from a year ago. Bellies totaled 71.00 million pounds, up 42% from a year earlier. Saturday slaughter is estimated at 63,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle slaughter remains steady despite tighter cattle numbers. Demand remains good and needs to be met.	1)	With mixed cash trade this week, the market may retain a discount to cash as next week could show similar trade if not slightly weaker.
2)	Cattle futures are at a discount to cash, which should provide some support under the market.	2)	Boxed beef prices have been mixed at best and could see further weakness today and next week.
3)	Hog futures finally showed some stability after new lows were made. Further short-covering may take place ahead of the weekend.	3)	New lows again Thursday do not provide any indication of support developing under the hog market.
4)	The market is extremely oversold with the Hogs & Pigs report on the calendar for next Thursday. This could trigger some positioning ahead of the report.	4)	Cutouts need to show stronger gains than they have been this week. The gains have not been able to make up for the losses.

**

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.