DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $265.84 +$1.15*

Hogs: Lower Futures: Mixed Lean Equiv: $124.70 +$1.29**

*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 in cattle futures seemed to have little concern over the two major reports to be released after the close, and rightly so. The Cattle on Feed report was bullish primarily for placements that were 8% below a year ago and 4% below the low end of the trade estimates. There is little indication that the beef herd is rebuilding, given limited heifer retention and the absence of cattle imports from Mexico. This should result in a bullish market today with futures likely gapping higher on the open. The unknown is what traders will do because cattle futures are already at record highs. It could be a buy-the-rumor, sell-the-fact type of trading action. The bi-annual cattle inventory report was also supportive to the market. Boxed beef price closed lower on Friday, with choice down $1.41 and select down $2.13. Cash cattle traded $1.00 higher on Friday, further impacting packer margin with the strong gains of a few weeks ago having now been eliminated. The Commitment of Traders report showed fund traders selling 277 live cattle contracts, reducing their net-long position to 126,295. Fund traders added 148 long feeder cattle positions, increasing their net-long positions to 36,414 and another record long.

Hog futures continue to consolidate. The weakness of the cash market suggests that futures could break to the downside. However, pork cutouts would suggest the market is building support. The National Daily Direct Afternoon Hog report on Friday showed cash down $3.34. Pork cutout values increased $1.32 to $118.86. Hog futures may find support today on spillover strength from cattle if cattle trade is substantially higher. The fund traders were net sellers of 6,829 contracts on the Commitment of Traders report, reducing their long position to 107,179.

	BULL SIDE		BEAR SIDE
1)	The Cattle on Feed report showed cattle placements in feedlots were 8% below a year ago and 4% below the trade expectations.	1)	Cattle futures are already at record highs, with the bullish reports potentially a buy-the-rumor, sell-the-fact opportunity.
2)	Beef heifers on July 1 were down 3% from July 1, 2023, clearly indicating the beef herd is not rebuilding, keeping supplies tight.	2)	The recent strong gains in beef packer margins have been eliminated and may cause the packers to reduce slaughter and be less aggressive in the cash market.
3)	Hog futures have been consolidating and possibly building support. This could provide traders with confidence to buy into the market.	3)	Cash hogs continue to struggle, which could pressure hog futures, resulting in futures breaking below the sideways trading range.
4)	Pork cutout values are holding, indicating demand is strong and may potentially increase if beef prices continue to increase.	4)	Traders have little to get excited over in the hog market. This may result in limited upside potential.

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

(c) Copyright 2025 DTN, LLC. All rights reserved.