DTN Early Word Livestock Comments

Cattle: Higher Futures: Mixed Live Equiv: $263.21 +$0.83*

Hogs: Lower Futures: Mixed Lean Equiv: $106.09 +$0.23**

*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 complex found strong buying interest Thursday as limited cash trade points to higher prices and boxed beef continued to increase. More cash sales were expected Thursday, but that did not happen. Limited trade points to higher cash this week. Cash activity will take place and finish ahead of the 3-day weekend. Packers may need to raise bids to obtain the cattle they need, as the feedlots remain unwilling to part with cattle at lower prices. Boxed beef prices continue to climb, with choice up $1.38 and select up $0.67. The Cattle on Feed report will be released this afternoon. The estimates are for on-feed numbers as of May 1 at 98.5% of a year ago, with the range of estimates from 98.3% to 99.0%. Placements are estimated at 96.9% and a range of 95.4% to $104.0%. Marketings in April at 96.7% and a range of 96.0% to 97.1%.

Hog futures showed light spread-trading again Thursday as traders are uncertain about price direction. The cash price held well Thursday, with the National Daily Direct Afternoon Hog report showing a loss of $0.01. Buying should be finished for the week. Pork cutouts were $0.23 higher, but will not provide much support to the complex. Futures prices will need to find support soon or a larger retracement may happen. Weekly export sales showed China as the second-largest buyer now that tariffs have been relaxed. Estimated slaughter Friday is 450,000 head, with Saturday slaughter at 11,000 head.

	BULL SIDE		BEAR SIDE
1)	Strong demand continues to support the market. Boxed beef prices continue to establish new highs. Cash cattle are expected to trade higher.	1)	A surprise increase in placements on the Cattle on Feed report could trigger fund liquidation. Analysts had a wide range of estimates.
2)	The Cattle on Feed report is expected to be friendly, with on-feed and placement numbers below a year ago.	2)	If packers have sufficient cattle purchased ahead, they may not be aggressive this week, resulting in steady cash. That could trigger selling.
3)	China is purchasing pork again, which should increase exports. Higher exports and the potential for increased domestic demand this summer may provide the support the market needs.	3)	Hog futures are having difficulty finding solid support. Both cash and cutouts remain lackluster.
4)	Traders seem reluctant to be aggressive sellers of hog futures, which may indicate that a level of support may be developing.	4)	Packers will not be aggressive buyers Friday as plants will be dark on Memorial Day. The shorter week will require fewer hogs.

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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