DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $221.68 -$0.11*

Hogs: Lower Futures: Mixed Lean Equiv: $107.26 +$1.04**

*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 futures were impressive Thursday. Not from the standpoint of a large price increase, but from the ability to close higher despite the headwinds of lower cash and more avian flu discovered in dairy cattle. Some initial light cash trade developed in the South at $2.00 lower than last week. This may have set the tone for cash trade Friday as packers do not intend to be aggressive buyers. Packer margins are below a year ago and substantially below the three-year average. Further cases of avian flu were discovered in North Carolina and South Dakota but did not adversely impact the market this time as it still has not been found in beef cattle. Weekly export sales were negative at 13,6700 metric tons (mt), down 27% from the previous week. Boxed beef was mixed with choice up $0.14 and select down $0.87.

Hog futures were mixed Thursday with April and August slightly lower while other contracts closed higher. Friday is the final day to trade April hogs. Cash did not perform well Thursday with the National Daily Direct Afternoon Hog report down $3.58 with a weighted average of $87.05. This was offset somewhat by cutouts increasing by $1.04. Demand is holding well but packers seem to have their needs covered for the week. Weekly export sales in the report Thursday showed net sales of 47,400 mt, which was an increase of 65% over the previous week. Futures will need to see some aggressive buying interest, or the market could see a further price retracement. Saturday slaughter is estimated at 87,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle futures closed higher Thursday despite the further discovery of avian flu in two more states. It has not been found in beef cattle and traders may be looking past this news.	1)	Cattle futures may have headwinds due to lower cash, struggling boxed beef, and further cases of avian flu in dairy cattle.
2)	USDA raised the average price for steers by $2.00 this year on the WASDE report. The estimate is for steers to average $185.	2)	If cattle futures are unable to hold technical support, further price weakness could unfold.
3)	Even though the packers seem to be finished buying for the week, higher pork cutouts indicate strong demand.	3)	The packers purchased hogs early and aggressively this week. After filling their needs, they have backed off and likely will not be aggressive Friday.
4)	USDA raised the average hog price by $2.00 for the year to an estimated $63, which would be $4.50 higher than the average for 2023.	4)	Traders may not be aggressive buyers ahead of the weekend, which could result in further liquidation as futures correct from being overbought.

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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