DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $219.87 +$1.59*

Hogs: Lower Futures: Mixed Lean Equiv: $83.29 -$1.44**

*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:

Cattle continue to move higher at an extremely rapid pace with April live cattle leading the charge Wednesday as higher cash is anticipated. So far there has been no reportable trade, but cash cattle are expected to trade Thursday. Feedlots are playing their cards well, knowing packers need cattle to maintain slaughter and meet demand. Boxed beef was mixed Thursday with choice up $3.38 and select down $0.23. The weakness for select boxed beef was meaningless and overshadowed by the strength so far this week. April live cattle futures increased $1.97 and are currently at the lower range of offers posted by feedlots in the South with offers as high as $177. Feeder cattle are in demand and buyers at auctions continue to pay higher prices for feeders. Weekly export sales may not have much influence on trading Thursday as the market is focused on cash.

Hogs just cannot find strong buyer interest. Any increase in futures has been short-lived. The path of least resistance has been lower with funds continuing to hold their short positions. Packers again are not having to bid up to find hogs this week with the National Direct Afternoon Hog report showing cash down $0.05. Cutouts took another big hit with values down $1.44. One has to wonder where there will be a demand shift of some degree to pork versus beef on the basis of value. April hog futures will go off the board on Monday, leaving three days of trading before May takes over as the front month. Weekly exports sales will hopefully be as good or better than the previous week.

	BULL SIDE		BEAR SIDE
1)	Feedlots are holding for higher cash, knowing that packers need cattle and are not in the position to reduce slaughter pace.	1)	The saying is that futures will fall faster than they increase. This may not be the case for cattle, but a price retracement could take place to relieve overbought technicals.
2)	New contract highs are being made daily, fueling the rally as traders remain aggressive with buying and sellers get run over with sell stops continuing to be triggered.	2)	Higher cattle and boxed beef prices will eventually have an impact on demand, which would temper the current exuberance of traders.
3)	Lower pork prices should improve exports, keeping product moving to international buyers.	3)	Cutouts continue to struggle as strong slaughter keeps plentiful pork supplies available to the market.
4)	Hog futures are oversold, which could result in somewhat of a bounce prior to the weekend.	4)	May hog futures hold about a $9.00 premium to April and will take over as the lead month Tuesday.

**

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.