DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $220.15 -$0.67*

Hogs: Steady Futures: Mixed Lean Equiv: $97.90 -$2.63**

*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:

Even though boxed beef prices have been more variable lately, it has not had much impact on overall demand and the need for cattle to be slaughtered. Even with substantially higher retail beef prices, consumers continue to prefer beef. Even with tighter cattle numbers, packers are maintaining slaughter pace to meet demand. Cattle remain available at a price. Feedlots can hold onto cattle longer due to lighter weights if they choose to. That allows them to hold out for steady to higher prices and that is what took place this week. Southern cattle traded steady to $1.00 higher while Northern dressed cattle traded $4.00 to $5.00 higher. Boxed beef prices closed mixed with choice down $2.44 and select up $2.51. Packers may want to finish up with most of their purchases Thursday. Feeder cattle are in demand as buyers at auctions continue to write larger checks to purchase available animals.

June hogs are trying to anticipate and remain close to the CME Lean Hog Index as the contract moves closer to settlement. The large premium it once had in anticipation of stronger prices moving into the summer has quickly eroded. Cash has taken a turn for the worse this week as the National Afternoon Hog report showed a loss of $1.64 Wednesday. Packers have not been aggressive this week as they are reducing purchases ahead of the holiday weekend. Cutout values also took a hit with the price down $2.63. Packers are pushing slaughter this week to prepare for plants being dark Monday. Saturday slaughter is estimated at 32,000 head.

	BULL SIDE		BEAR SIDE
1)	Higher cash this week provided another positive shot in the arm for feedlots and for traders to buy futures more aggressively.	1)	Beef demand may slow somewhat after Memorial Day, which could result in prices reaching a threshold.
2)	Front-month June cattle and contracts in 2024 made new highs yesterday with other contracts poised to make new highs. This continues to provide confidence to traders to buy into the market.	2)	With prices for feeder cattle getting possibly a little out of hand, buyers might just say enough is enough, even though the overall market remains strong.
3)	Hog futures are in line with cash, carrying no premium. Any strength of cash after the holiday weekend should be reflected in futures.	3)	Hogs continue to remain plentiful, leaving packers with sufficient available supply without having to continue to bid up for it.
4)	There may be some short-covering Thursday as many traders will wind down for the Memorial Day weekend a day early and do not want to have to think about their positions during the holiday.	4)	Packers may not be aggressive again Thursday as they prepare for the extended weekend and plants being closed on Monday.

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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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