DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $234.47 +$0.50*

Hogs: Higher Futures: Mixed Lean Equiv: $104.79 -$2.41**

*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:

Cattle futures tried to push higher Monday with traders more aggressive at the beginning of trade, but there was uncertainty over whether cash could see further gains this week. Traders are looking at a shorter trading week as the markets will be closed Wednesday for the federal Juneteenth holiday. Traders will also be thinking about the Cattle on Feed report set for Friday. The market is supported, leaving limited downside potential. There were new weekly weighted average highs for both the live and dressed categories last week, indicating the incredible strength the market is exhibiting. Boxed beef prices advanced with choice up $0.58 and select up $1.01. Feeder cattle futures followed a similar pattern with nearby contracts slightly lower and closing nearly $1.50 off their highs. Later contracts closed slightly higher

Hog futures followed through posting triple-digit gains in the three nearby contracts and higher closes in all contracts. Short-covering is finally taking place in the extremely oversold market. How far that will carry the market is uncertain as the strength Monday was not the result of market fundamentals. Cash prices were not released due to packer confidentially and cutouts fell $2.41, eliminating about half of Friday's gain. The short-covering might be short-lived unless further strength is seen in cash and cutouts.

	BULL SIDE		BEAR SIDE
1)	Boxed beef prices continue to increase, indicating demand remains strong. Consumers may not reduce consumption as much as anticipated during the summer months.	1)	Beef demand generally slows during the hot days of summer. Boxed beef prices may reflect that over the next few weeks.
2)	New weekly weighted average highs for live and dressed categories may continue as cattle supplies remain tight.	2)	Packers will not be willing to bid up for cattle this week and may wait until after the Cattle on Feed report before doing much business.
3)	Hog futures may have just begun the short-covering phase with further strength unfolding as prices increase and stops are triggered.	3)	The weakness of pork cutouts Monday indicates the market may not be ready to trend higher. Futures will not continue higher without underlying support.
4)	The July hog contract nearly closed the chart gap remaining from June 4. That gap may be closed sooner rather than later.	4)	Hogs are readily available between domestic supplies and what is coming from Canada. The packers have plenty to choose from at higher weights than last year. .

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Join us next Friday for the DTN Ag Summit Series: Navigating the Cattle Market's Ups and Downs. The cattle market's anything but predictable these days. It seemed poised for a comeback, only to be hit with an avian influenza outbreak in dairy cattle. Even in this challenging environment, there are tools producers can use to manage their risk. In this DTN Ag Summit Series, we'll discuss the ins and outs of livestock insurance as well as cattle market developments cow-calf producers need to know for the 2024 season. Click here to register: https://dtn.link/…

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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