DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $225.83 -$0.95*

Hogs: Higher Futures: Higher Lean Equiv: $88.93 +0.07**

*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 traders had little to go on and decided to be a bit more aggressive at buying futures due to the overall nature of the market. Cattle supplies are tighter and will remain that way as long as demand maintains the need for beef. There was no indication of the potential for cash this week with only showlists being distributed yesterday. Boxed beef did not provide much support as choice declined $0.63 and select declined $3.04. There is much speculation over cash this week with many believing cash will be no less than steady. However, with packers purchasing 30% of last week's cattle for deferred delivery, it does increase the potential for another week of lower cash.

Hogs could not rebound from the sharp losses on Friday even though cutouts were higher on Friday. Traders lacked the confidence to step back into the market aggressively to buy the break. They may be more supportive today as both cash and cutouts were higher yesterday. The National Direct Afternoon report showed cash up $1.91. Cutouts were slightly higher with a gain of $0.07, but a gain, nevertheless. If the pattern holds, hog futures should trade higher as traders react to higher cash and cutouts. According to the U.S. Meat Export Federation, March pork exports totaled 260,195 MT., up 17% over March 2022 and the largest since May 2021. First quarter pork exports totaled 716,691 MT, up 14% over the same period last year. Low pork prices have increased exports keeping pork moving to international consumers.

	BULL SIDE		BEAR SIDE
1)	Traders began the week with optimism and anticipation cash cattle may trade no less than steady this week.	1)	Boxed beef is showing signs of weakness potentially indicating consumer demand is slowing.
2)	Cattle corrected from being overbought leaving traders with greater confidence in buying back into the market.	2)	Packers have an amount of cattle purchased for deferred delivery which may leave them less aggressive in the cash market this week.
3)	Pork exports have been strong as lower prices have increased international demand. This keeps pork from backing up into the market.	3)	Hog futures could not rebound from the large decline on Friday leaving traders cautious about buying back into the market aggressively.
4)	Packers buying hogs more aggressively on Monday is a good sign indicating they need hogs and paid more to get them.	4)	The market needs to show more consistency in cutout values to turn the trend decisively higher.

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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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