DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $227.95 +$1.15*

Hogs: Steady Futures: Higher Lean Equiv: $85.86 +$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:

Traders are waiting for solid direction from cash cattle trade. Cash trading so far has been light with Nebraska showing 14,005 head traded at $278 to $285 dressed and Iowa with 26,444 traded from $282 to $285. Live trade has been light and not providing solid direction. With cash trade pushed to Friday, it generally bodes well for better cash. Feedlots and packers are going toe-to-toe this week, vying for the upper hand. Boxed beef was higher with choice up $1.83 and select up $1.15. The bearish aspect of Thursday was poor beef export sales with exports at 9,500 metric tons (MT), down 50% from the previous week and down 28% from the four-week average. High beef prices are definitely having an impact on international demand.

Hog futures held well after the recent strong price increases and a mixed close Thursday. Support Friday should stem from strong cash and higher cutouts. The National Direct Afternoon Hog report showed cash up $2.46. This has not been seen for a long time, especially on a Thursday. This followed on the heels of a gain of $2.51 Wednesday. Cutouts gained $0.44, which should add to the support. Weekly exports sales were a marketing year high at 54,000 MT, up 50% from the previous week and up 47% from the four-week average. Saturday slaughter is projected at 79,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle futures rejected the lower prices Thursday to close higher in anticipation that cash trade pushed until Friday bodes well for the market.	1)	Some light cash cattle trade has been lower than last week. This may set the stage for cash activity Friday.
2)	Boxed beef prices have been increasing this week, indicating continued strong demand.	2)	The April live cattle contract goes off the board Friday with June becoming the front month and futures pointing to lower price.
3)	Cash hog prices have increased $6.12 over the past three days. That has not been seen for quite some time. Maybe the market has turned a corner.	3)	Cutouts still have not been able to find stability. This indicates demand remains variable.
4)	Higher pork cutouts Thursday should have a positive influence on futures prices Friday.	4)	It may be difficult to see further gains in cash in the current market environment.

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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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