DTN Early Word Livestock Comments

Cattle: Steady Futures: Lower Live Equiv: $250.54 -$1.91*

Hogs: Higher Futures: Mixed Lean Equiv: $102.16 +$0.02**

*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:

Live cattle posted triple-digit losses through the December contract, as the market may have been influenced by the closing of the April contract and its overbought status. The front-month June contract declined $1.80, but not until it initially made a new contract high. It is difficult to say whether there may be larger price corrections in store or if this was just a round of profit-taking due to traders being cautious over the extremely high prices. Boxed beef prices were lower on Wednesday with choice down $2.95 and select down $1.80. The weakness of the boxed beef will be of little consequence unless it continues, which could indicate demand weakness. The weekly export sales report will be released Thursday and will be an important indicator of the impact of tariffs. Cash cattle are expected to see some light trade with higher prices anticipated.

Hog futures tried to regain some of the recent losses, but traders did not follow through. Wednesday's weakness could result in further declines as traders may liquidate some positions due to the inability of cash and cutouts to find consistent support. Futures contracts in 2026 made new highs and closed higher due to lighter trading activity and greater optimism for demand. The National Daily Direct Afternoon Hog report showed cash down $0.02. Cash may be higher Thursday as packers may need to purchase hogs more aggressively to procure what they need for the week. Pork cutouts gained $0.02. Saturday slaughter is estimated at 63,000 head.

	BULL SIDE		BEAR SIDE
1)	The weakness in cattle futures is likely a price correction rather than a change in trend. Market fundamentals have not changed.	1)	A price correction of an overbought market generally lasts 2 to 3 days. There may be further liquidation ahead of the weekend.
2)	Packers appear to be short-bought and will need to step up to obtain the cattle they need to satisfy demand. Feedlots will hold out for higher prices.	2)	If the weekly export sales report shows poor volume, further pressure may be put on the market as more beef needs to be absorbed domestically. High prices may limit extra consumption.
3)	There was not much change in cash or cutouts on Wednesday, which should provide market support.	3)	Hog weights were higher again last week with a gain of 0.3 pounds at an average of 291.6 pounds. This is 4.5 pounds higher than a year ago.
4)	Hog weights are higher, but the slaughter pace remains strong. This indicates good demand as the higher tonnage of pork is being absorbed.	4)	Without consistent cash and cutout prices, the upside price potential for hogs may be limited. The weekly export sales report is expected to be bearish.

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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