DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $208.60 +$0.20*

Hogs: Higher Futures: Mixed Lean Equiv: $87.27 -$1.22**

*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 was back-and-forth activity Tuesday with live cattle closing in positive territory. Trading ranges were narrow as there was little news. No cash trading activity took place with mixed ideas as to what that will do this week. With boxed beef showing some strength so far this week, some believe that may result in slightly higher cash. Others believe it will take more than that to push packers to pay more than steady money as they have some cattle already purchased ahead. Tuesday, boxed beef was higher with choice up $0.27 and select up $0.64. Slaughter pace continues to hold steady. Feeder cattle were mixed with March showing the greatest decline as it holds close to the index as the contract closes Thursday. Demand for feeder cattle remains strong with higher prices at auctions.

Spread trading was taking place in hogs Tuesday as the market could not follow-though from Monday and traders were positioning ahead of the upcoming Hogs & Pigs report Thursday. The National Direct Afternoon Hog report showed cash down $0.20. So far, the week has not been positive for cutouts with the price down $1.22 Tuesday. That may influence trade Wednesday, but might be offset by traders continuing to position ahead of the report. The average trade estimate for all hogs and pigs on March 1 is 100.3% of last year. Kept for breeding at 100.6% and kept for marketing at 100.3%. Cash is expected to be slightly higher Wednesday as packers will want to step up purchases to procure most of the hogs they need.

	BULL SIDE		BEAR SIDE
1)	If boxed beef continues to trend higher, cash prices may also increase as feedlots will hold out for higher prices.	1)	Live cattle futures have chart gaps remaining below the market that may likely be filled at some point.
2)	Live cattle futures held gains Tuesday with the potential for futures to regain losses if stronger cash develops.	2)	Steady cash cattle trade this week could possibly retrace some of the recent gains of futures.
3)	Traders may not pressure the hog market very much ahead of the Hogs & Pigs report Thursday with the potential for further short-covering.	3)	Lower pork cutouts Tuesday may keep some pressure on the market Wednesday.
4)	Hog futures are still oversold, which may limit further selling due to the Commitment of Traders report showing funds already holding record short positions.	4)	Plentiful hog supplies keep packers from having to be very aggressive. Slaughter pace remains strong, easily meeting both domestic and international demand.

**

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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