DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $285.10 +2.82*

Hogs: Lower Futures: Higher Lean Equiv: $124.84 +0.70**

*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:

Traders had the day off Thursday, providing time to reflect on the market and assess the direction it will take from here. Technically, the market looks to be top-heavy and may have difficulty moving back to the highs. Light cash cattle trade took place Thursday, with live steers and heifers in Iowa at $231 and dressed at $376. Nebraska showed dressed sales at $376. This may have set the stage for the cash trade Friday. Boxed beef prices were higher, with choice up $4.92 and select up $1.85. The choice cutout value is at an incredible $393.79. Traders will grapple with the technical and fundamental aspects of the market Friday, as well as the Cattle on Feed report to be released after the close. The average estimate for on feed as of June 1 is 98.8% of a year ago. Placements in May are estimated at 94.2% and marketings are 90.1%.

Hogs may find support Friday, but that support might be limited as cash on Thursday was lower while cutouts were higher. The National Daily Direct Afternoon Hog report showed cash down $0.95 on a good volume of hogs sold. Pork cutouts were higher with a gain of $0.70. Cash is expected to be lower Friday as packers have been aggressive the first three days of the week. The weekly hog weights are declining and running below a year ago. Lower weights and the seeming tightening of hog supplies may continue to support the market.

	BULL SIDE		BEAR SIDE
1)	Cattle weights are decreasing, which may amount to less beef over time. Packers would need to purchase more animals to get the same tonnage.	1)	Cattle futures seem to be rolling over. If there is lower cash trade today, liquidation could result.
2)	Cattle numbers remain tight and the Cattle on Feed report is expected to show lower placements and on-feed numbers than a year ago.	2)	The Cattle on Feed report may keep traders cautious. Some profit-taking could result ahead of the report.
3)	Weekly hog weights are declining. The average last week was 286.5 pounds, down 0.7 pounds from the previous week and down 0.9 pounds from a year ago.	3)	The July and August hog contracts have chart gaps that may be filled below the current prices.
4)	The trend has been higher, and traders are trading with the trend. The demand for pork is improving.	4)	Packers likely have their hogs purchased for the week and will not be aggressive Friday, likely resulting in lower cash.

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Editor's Note: Get ahead of the herd with the latest insights on the cattle market's changing cycle. Join us on Tuesday, June 24, from 10 a.m. CDT to noon for an in-depth analysis of how weather patterns, trade disruptions, and drought are reshaping the beef industry's traditional 10-year cycle. Oklahoma State University Livestock Marketing Specialist Dr. Derrell Peel shares what the cowherd of the future will look like, while DTN experts share details on weather conditions for forage and pastures, hay market dynamics and what it all means for fat and live cattle prices. Register for free here: https://dtn.link/… .

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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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