DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $221.38 -$2.23*

Hogs: Lower Futures: Higher Lean Equiv: $104.12 +$3.24**

*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:

Cattle have had a difficult week as the market is searching for some stability. However, with the news of HPAI in dairy cattle now being found in another state, it keeps the uncertainty alive and well in the market and forefront of the news. This has resulted in reduced demand as boxed beef prices have declined throughout the week. There was a large drop on Thursday with choice down $4.15 and select down $0.87. Cash cattle began trading lower Thursday with cattle in the North posting early sales $3 to $5 lower. Hopefully, that did not set the pattern for the cash cattle trade Friday. Southern cattle showed some trade at $1 to $2 lower. There remains strong demand for feeder cattle at auctions with buyers remaining bullish over price due to tight numbers.

Hogs continue to be the star of the show, benefiting from strong demand. The packers have been aggressive this week, purchasing hogs to supply increased slaughter rates. The National Daily Direct Afternoon Hog report gained $1.19, moving the weighted average price to $87.23. Cash is not expected to be higher Friday as packers likely have most of their hogs purchased for the week. Cutouts showed another impressive gain with an increase of $3.24 with bellies up $11.53. It certainly seems consumer demand has improved for pork with some possibly attributed to the discovery of HPAI in dairy cattle. Saturday slaughter is estimated at 115,000 head.

	BULL SIDE		BEAR SIDE
1)	Even if cash trades lower This week, futures will hold a discount to the lower prices, which should keep them from falling further.	1)	Cattle futures have not been able to rebound after the large selloff. Traders are cautious over the continued development of the HPAI news.
2)	Cattle futures are oversold and could find some support near the current level as the market still indicates tight cattle supplies will remain through much of the year if not longer.	2)	Beef export sales were up significantly from the previous week, but that is not enough to change the current negative attitude in the market.
3)	Strong cash and cutouts should support the hog market today. Demand for pork continues to improve.	3)	Hog traders could take some profits ahead of the weekend, leaving the market unable to see further gains if that takes place.
4)	June and later hog contracts closed at new contract highs again Thursday, keeping the uptrend intact. Traders remain confident over further gains.	4)	Weekly export sales were quite a bit lower than the previous week, possibly indicating international demand may be impacted by higher pork prices.

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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