DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $219.11 -$1.31*

Hogs: Higher Futures: Mixed Lean Equiv: $103.23 +$0.38**

*Based on the formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. The 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:

The news of the discovery of the HPAI virus in milk sent some traders running or the door looking to liquidate their long positions. Even though the consumption of pasteurized milk is safe and the consumption of meat is safe, consumers may react negatively. This may be the overriding influence on the market in the near term. The virus has not been found in beef cattle at this point but dairy cattle are slaughtered for beef as well. Some very light cattle trade developed in the South at steady money with last week which should be positive for the market. Boxed beef prices were lower with choice down $1.66 and select down $2.34.

Hog futures struggled and tried to close higher with only the August contract posting a minor gain of $0.05. The National Daily Direct Afternoon Hog report showed a decline of $0.36 with a weighted average of $91.49. This was offset somewhat by pork cutouts increasing by $0.38. It is anticipated that the packers will need to remain aggressive to purchase the required hogs they need for the week which could support cash today. There may also be a positive reaction to the news of HPAI possibly being more widespread in dairy cattle than reported with some detected in milk. This may improve pork consumption if consumers shy away from beef. Hopefully, weekly export sales will provide added support to the market.

	BULL SIDE		BEAR SIDE
1)	Some light cash cattle trade took place in the South at steady money with last week. This should be supportive of the market.	1)	The HPAI virus found in milk and possibly being more widespread in dairy cattle than reported may hurt the cattle market if consumers reduce beef consumption.
2)	The negative reaction to the HPAI virus being found in milk and possibly more widespread in dairy cattle than reported may be short-lived as it should not impact the safety of beef.	2)	October and later live cattle futures and August and later feeder cattle futures have chart gaps below the market that may be filled at some point.
3)	Pork may benefit from the HPAI virus dominating the livestock news again on Wednesday. Consumers could turn more to pork consumption.	3)	Hog futures may have reached price resistance with traders cautious over becoming too aggressive at the higher prices.
4)	Hog futures opened lower on Wednesday, but rejected the lows and minimized the losses. This could increase buying interest today.	4)	If weekly export sales do not show an increase over last week, pressure could remain on the market.

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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