DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $233.42 -$0.95*

Hogs: Lower Futures: Mixed Lean Equiv: $103.19 +$0.05**

*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 standoff in cattle trade broke in favor of feedlots Friday. Packers stepped up and paid the price feedlots were asking. Southern live cattle traded $6.00 higher with Northern dressed cattle trading $9.00 higher. Cash prices are back to where they had been a few weeks ago. It will be up to continued strong beef demand to maintain higher prices. Consumer sentiment fell 11% on the latest report. Sentiment declined 27% from a year ago as the index moved to the lowest level since November 2022. This may limit the strength of beef demand as time moves forward and consumers remain concerned about the economy. Boxed beef prices closed lower Friday with choice down $1.42 and select down $1.15. The Commitments of Traders report showed fund traders increasing their long live cattle positions by 537 futures contracts to a net-long of 111,061. Feeder cattle showed an increase of 1,187 long positions to a new long of 28,767.

Traders unwound some of the spreads Friday that were put on earlier in the week. There was not much for traders to hang their hat on for market direction. The National Daily Direct Afternoon Hog report showed a decline of $0.10. Packers were not expected to be aggressive. Pork cutout values increased by $0.09 and provided little support. Hog futures may struggle to regain last week's losses unless pork cutouts show consistent gains. This would indicate strong demand. Packers will not be aggressive Monday as they assess weekend demand before deciding how aggressive they need to be. Hog supplies remain sufficient with little concern over supply tightness. The Commitments of Traders report showed fund traders selling 5,899 hog futures positions, reducing their net-long to 50,429 contracts.

	BULL SIDE		BEAR SIDE
1)	The large increase in cash cattle on Friday should provide further support to live cattle futures.	1)	The tariffs may not have much impact on beef directly, but higher food prices and other prices will impact the amount of beef consumers purchase as they adjust.
2)	Feeder cattle futures closed at new contract highs. Traders remain bullish on the market, pushing futures to unprecedented highs.	2)	Live cattle futures were near the current levels not long ago from which they fell back on a price correction. A similar pattern could be seen again.
3)	The movement of pork indicates demand is steady with packers needing to keep a strong slaughter pace.	3)	The fund traders continue to liquidate their long hog futures positions as the optimism over price potential has waned.
4)	The large decline in consumer sentiment may turn more consumer interest from beef to pork as consumers adjust to higher food prices.	4)	Hog futures may have difficulty regaining the recent losses under the current market fundamentals.

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.

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Robin Schmahl can be reached at rschmahl@agdairy.com

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