DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $292.75 -$0.30*

Hogs: Higher Futures: Higher Lean Equiv: $105.56 -$0.40**

*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 bearishness of the placement number on the Cattle on Feed report was not a concern for traders on Monday, as the focus was on the overall market and not just a report. The dryness in the Western regions, the wildfires in Nebraska, and high calf prices do not bode well for herd rebuilding anytime soon. Why raise them when you can get exceptional prices for calves? A lower showlist of cattle may mean feedlots are willing to hold for higher prices. Feedlots are feeding cattle to heavier weights. Boxed beef prices were mixed, with choice down $0.98 and select up $0.89. The February Cold Storage report will be released today, showing the level of beef inventory. The March feeder cattle contract will go off the board on Thursday, with the April contract taking over as the lead month.

Hog futures tried to regain some of the losses, but ran out of steam on Monday. The April contract closed below support, while the later contracts held support for now. It will be crucial for contracts to remain above support, or another leg down is possible. Packers were aggressively looking for hogs on Monday. The National Daily Direct Afternoon report showed cash up $1.58 on relatively light volume. They may remain aggressive today as they intend to buy early in the week and maintain the increased level of slaughter. Pork cutouts were higher, posting a gain of $0.40.

	BULL SIDE		BEAR SIDE
1)	The bearish Cattle on Feed report was taken in stride and had little impact on the market. Traders are looking at the bigger fundamental picture.	1)	Boxed beef prices have turned choppy, which may impact the willingness of packers to pay more for cattle in the near term.
2)	Showlists are lighter so far this week, which may indicate the feedlots will hold for higher prices.	2)	Packers were able to purchase cattle for deferred delivery as far out as the second week in April. This may leave them less aggressive in the cash market.
3)	Hog futures have held technical support and may garner buyer interest if that support holds.	3)	Cash hogs and pork cutouts continue to remain choppy. Traders need to see consistency to support the market.
4)	Easter demand is just around the corner, and that should support cutouts with hams providing the strength.	4)	If hog futures fall below technical support, further liquidation may take place.

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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