DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $243.63 +1.25*

Hogs: Higher Futures: Mixed Lean Equiv: $101.63 +$1.78**

*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:

Cash cattle trade has been pushed off until today as the packers and feedlots have been holding and are waiting to see who will blink first. Some light activity took place in Kansas with heifers trading at $210, but otherwise, it has been quiet. The feedlots may hold due to the strength this week in cattle futures. They may hold cattle over another week if they do not get the prices they want. The packers do not seem to have purchased many cattle ahead. Boxed beef prices indicate demand continues to remain strong. Choice cuts increased $1.73, with select up $1.83. It seems consumers have not yet reached a threshold. Feeder cattle are in strong demand, with higher prices seen at auctions. Feeder cattle futures are near contract highs with both August and September over $290.

Hog futures took a breather, unable to make a higher high on Thursday. The June contract closed below $100 again, with other contracts posting minor losses. The May contract showed the only gain of $0.07. The National Direct Afternoon Hog report showed cash lower as expected, with a decline of $0.56. Pork cutouts were $1.78 higher, regaining the loss of Wednesday. Futures may see further weakness today as traders may not want to push the market higher into the weekend. Saturday slaughter is estimated at 139,000 head.

	BULL SIDE		BEAR SIDE
1)	Traders anticipate higher cash trade with the April live cattle contract closing at a new contract high of $213.50.	1)	Cattle prices will not increase indefinitely. Bef prices will eventually reach a level at which consumers will reduce consumption.
2)	Strong boxed beef prices indicate good demand. Consumers have not reached a threshold of what they will pay for beef.	2)	Weekly beef export sales were down 41% from the previous week, with tariffs likely impacting exports.
3)	It has been a good week for cash hog prices. This may indicate a tighter hog supply and an increase in demand.	3)	Weekly pork export sales were poor, with only 5,800 MT sold. China is out of the market as tariffs impact sales.
4)	The minor weakness of hog futures on Thursday may be the market taking a breather ahead of the weekend and not a change in trend.	4)	Hog futures are due for a price correction after consistent gains over the past two weeks. Traders may liquidate some positions ahead of the weekend.

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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