DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $226.51 -$0.40*

Hogs: Lower Futures: Mixed Lean Equiv: $87.08 +0.05**

*Based on formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equivalent 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 tried to rebound Thursday but failed to maintain gains throughout the day with contracts closing mixed. Cash cattle trade for the week was lower with Northern dressed trading $3.00 lower and Southern live trading $1.00 lower. Much of the cash business is done, leaving the market with little else to focus on Friday. Weekly export sales Thursday showed better exports than the previous week at 20,100 metric tons (mt), but that had little impact on trading activity. Boxed beef prices closed higher with choice up $0.43 and select up $0.37. The slaughter pace has slowed slightly, which may keep packers in the driver's seat for the time being. Futures prices are not expected to do much Friday ahead of the weekend.

Hog futures could not hold for the second consecutive day, posting losses. Stronger cash Wednesday did not provide support to the market. The National Direct Afternoon Hog report Thursday showed cash down $1.34. Weekly export sales were good at 49,000 mt, down 9% from the previous week's marketing year high. China was again a strong purchaser of pork. Cutouts were able to show a slight gain of $0.05. Packers have purchased much of their needs for the week with limited business expected Friday. Futures could see some strength prior to the weekend as recent sellers may take some profit off the table ahead of the weekend. Saturday slaughter is estimated at 127,000 head.

	BULL SIDE		BEAR SIDE
1)	The price correction in the cattle market may have run its course. Any indication of stronger cash may trigger aggressive buying.	1)	Packers slowing slaughter and buying cattle ahead does not bode well for higher cash anytime soon.
2)	Cattle numbers remain tight, and weights remain lower than a year ago, indicating cattle continue to be pulled forward.	2)	June live cattle futures have yet to fill the chart gap slightly below the market. Then there is another gap $5.00 lower.
3)	Hog futures may have corrected sufficiently to bring buyers back into the market ahead of the weekend.	3)	Pork cutouts continue to struggle unable to find solid footing.
4)	Hog weights decreased a pound from the previous week, averaging 285.9 pounds. This is 2.6 pounds lower than a year earlier.	4)	May hog futures hold a premium to cash and the index with the contract having only one week remaining to trade.

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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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