DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $226.24 +$1.06*

Hogs: Higher Futures: Higher Lean Equiv: $85.96 +$1.32**

*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 futures were under pressure some of Tuesday as traders seemed to be a little hesitant over the strength of cash cattle trade and the upcoming Cattle on Feed report. Cash cattle are anticipated to trade higher this week, which would be positive to the market; yet traders are not adding premium to the market. Cash cattle have not traded so far and are not expected to trade Wednesday. Slaughter pace remains strong, requiring packers to continue to aggressively look for cattle. Boxed beef continues to increase with choice up $1.08 and select up $2.29. Cattle continue to be pulled forward to meet strong demand. This could further tighten supply later as supply might be less than anticipated in May or June.

Hog futures spent a brief period in positive territory, but selling then became more aggressive, moving price down and nearly eliminating the gains of the previous two days. They may have some strength Wednesday as the triggering of sell stops Tuesday may have run its course. Cutouts were higher, posting a gain of $1.32. However, cash continued lower with the National Direct Afternoon Hog report down $0.65. There is hope the summer grilling season will increase pork consumption, along with the potential of a demand shift from beef to pork due to price.

	BULL SIDE		BEAR SIDE
1)	Cattle futures were able to reject the weakness Tuesday and close higher. Price weakness will be limited due to strong cash.	1)	Cattle futures seem to be teetering recently with traders uncertain over the ongoing strength of consumer demand.
2)	Packers continue to pull cattle forward to maintain a strong slaughter pace. This is reducing weights and tightening supply further.	2)	Cash cattle are expected to trade higher, but the amount of gain may be disappointing if packers have some cattle already purchased ahead.
3)	Pork cutouts were higher Tuesday, which may trigger some short-covering. Traders may be cautious over pressing the market too much lower.	3)	Hog futures are near the previous low of last week. A move below that level could trigger more sell stops.
4)	Hog futures remain oversold. This could trigger some short-covering again, moving the market into a sideways trading pattern.	4)	Packers continue to have plentiful hogs to choose from, leaving them unaggressive in the cash market.

**

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.