DTN Early Word Livestock Comments

Cattle: Lower Futures: Lower Live Equiv: $293.23 -$1.74*

Hogs: Lower Futures: Higher Lean Equiv: $120.74 +$0.66**

*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 saw the dip in live cattle futures as a buying opportunity on Wednesday. That was not the case for feeder cattle as November and later contracts showed losses, with contracts in 2026 posting triple-digit losses. The spread between live cattle and feeder cattle has been wide and may move closer to normal. The weakness in feeder cattle may be an anchor on live cattle, limiting upside price potential in the near term. Early indications of the cash cattle trade this week show weakness. Dressed cattle were noted at $3.00 to $5.00 lower. Cash trading activity is expected to increase today. Boxed beef prices were lower with choice down $2.03 and select down $3.28.

Hog futures close mixed. The nearby October moved to new contract highs but was unable to close there. Later contracts held up well and may be establishing a temporary sideways trading range. The increase of both cash and cutouts on Wednesday may provide continued support to futures. The National Daily Direct Afternoon Hog report showed cash up $1.66 with a weighted average of $107.76. The packers purchased a good volume of hogs again on Wednesday as they have been increasing the slaughter pace. Pork cutouts gained $0.66, pushing the cutout value to $114.77. Saturday slaughter is estimated at 93,000 head.

	BULL SIDE		BEAR SIDE
1)	Even if cash cattle trade lower, live cattle futures hold a discount to cash and may limit downside pressure.	1)	Cash cattle are expected to trade lower as feedlots are in a position where they need to move the heavier-weight cattle. The packers will hold lower bids.
2)	Tight cattle supplies and the dip in futures may be viewed as a buying opportunity. Demand is expected to hold strong.	2)	Cattle futures need to hold support, or further liquidation could take place as the market remains overbought.
3)	Hog futures have been holding support but have been unable to push higher. A move above technical resistance should increase buying interest.	3)	Hog weights increased significantly last week to an average of 286.3 pounds, up 3.8 pounds from the previous week. This is 2.3 pounds heavier than a year ago.
4)	Pork cutout prices have been improving, indicating good demand. Packers have been increasing the slaughter pace.	4)	Hog futures may have difficulty moving above price resistance unless cutouts can increase consistently.

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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