DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $242.32 -$0.86*

Hogs: Higher Futures: Higher Lean Equiv: $102.77 +$4.18**

*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 Cattle on Feed report did not show anything significantly out of expectations on Thursday. Placements were higher than analyst expectations at 105%, but cattle marketed were also higher than expectations at 101%. This leaves it mostly neutral. Ongoing demand will be the determining factor for cattle prices moving forward. The strong increase in cash last week, with prices $4.00 to $7.00 higher, certainly supports the market and will have feedlots holding for more this week. International demand remains good with the tariffs old news and not impacting the market. Boxed beef prices Friday were lower with choice down $1.38 and select down $0.84. The Commitments of Traders report showed fund traders liquidating 14,353 live cattle futures, reducing their net-long positions to 103,264 contracts. They sold 2,328 feeder cattle futures, reducing their netlong position to 26,951 contracts.

Last week was an impressive week for hog futures despite somewhat neutral fundamentals. Closing the chart gaps at the beginning of the week only fueled the buying interest of traders. Strength could continue Monday as pork cutouts on Friday jumped $4.22 due to the increase in bellies of $14.44, butts up $6.20 and loins up $4.22. Cash was not released on Friday, but the weighted average price was $83.35. Hog slaughter is projected to be light Monday at 368,000 head due to some plants being closed. The Commitments of Traders report showed fund traders increasing their net-long position by 3,718 futures contracts to a current net-long of 37,715.

	BULL SIDE		BEAR SIDE
1)	Higher cash paid for cattle last week indicates packers were short-bought. Feedlots will hold out for more money this week.	1)	Live cattle futures have closed the chart gaps, with futures reaching some price resistance. Futures may have difficulty reaching new contract highs.
2)	The upward momentum may continue as traders trade the trend. The chart gaps were closed, and new contract highs are not much higher.	2)	Boxed beef prices have stabilized, indicating demand may have reached a threshold. There will be a limit to what consumers will pay.
3)	Hog futures have moved $10.00 higher in the June and July contracts as the market corrected from being oversold and technical buying took over. Further gains may be possible.	3)	Hog futures have returned to the trading range they were in during March. Futures may have difficulty breaking above that range.
4)	Strong cutouts on Friday may indicate the beginning of better demand as the spring progresses and grilling increases.	4)	Cutouts had a large increase Friday, but that likely will not continue. The holiday magnified the price increases. We have seen this previously, only to have prices fall back.

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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