DTN Early Word Livestock Comments

Cattle: Steady/Lower Futures: Mixed Live Equiv: $225.61 -$0.04*

Hogs: Higher Futures: Higher Lean Equiv: $85.18 +$1.34**

*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:

April live cattle took a hit Thursday, closing lower, while later contracts rejected early lower prices and closed higher. Northern dressed cattle trading $2.00 lower kept the pressure on the nearby month. There is hope that packers may need to step up Friday to finish purchasing for the week; but the cash trend so far this week is steady to $2.00 lower. Boxed beef was mixed with choice up $1.07 and select down $2.72. Select is now at $306.99, which may begin to affect demand. Weekly exports sales were higher than last week at 19,100 metric tons (mt), but that did not have much impact on the market as the market was under pressure early. Feeder cattle futures had an impressive price swing with May fluctuating in a $4.00 range. Traders bought the break, pushing contracts to new highs. Trading activity may be mixed today as traders prepare for the Cattle on Feed report to be released after the close of trading. On feed numbers on April 1 are estimated at 94.8%. Placements during the month of March at 95.2%. Marketed in March is estimated at 98.9%.

Hog futures opened lower in response to continued cash weakness and lower cutouts Wednesday. Some contracts matched the previous day's contract low while others made new lows. Cash hogs have been lower all week with the National Direct Afternoon Hog report showing a decline of $0.75 Thursday. Packers have not been aggressive but may need to step up a little Friday to finish up purchases for the week. Cutouts were higher with a gain of $1.34. This should have some impact on the market, along with it being a Friday and some short-covering into the weekend. Weekly export sales totaled 36,100 mt and were 33% above last week. That may provide some delayed strength Friday. Saturday slaughter is estimated at 50,000 head.

	BULL SIDE		BEAR SIDE
1)	The price reversal in cattle futures was impressive, indicating traders want to buy the break.	1)	Steady to lower cash cattle trade was not what bullish traders wanted to see or expected. Prices may be nearing consumer resistance levels.
2)	Cattle weights are significantly below a year ago with steers six pounds lighter than last week. Cattle continue to be pulled ahead, which may tighten supplies more than expected.	2)	Trading ahead of the Cattle on Feed report may be tempered Friday as traders position themselves ahead of the report. They want to prepare for the unexpected.
3)	Pork cutouts were higher Thursday, which may provide some support to the market Friday.	3)	Cash support remains elusive in the hog market. Hogs remain available, leaving packers unaggressive.
4)	Hog weights are 0.4 pounds below the previous week and 1.6 pounds lighter than a year ago. Marketing remains current.	4)	Bearish traders view any price rallies as a selling opportunity, even though the market is oversold technically. Fundamental support is lacking.

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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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