DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $287.80 -$1.72*

Hogs: Higher Futures: Mixed Lean Equiv: $101.31 -$1.05**

*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:

Cattle futures regained the losses of Wednesday but had little else to show for it. Another day of weakness for boxed beef may have a negative influence on the market today. Boxed beef prices declined in both categories, with choice down $1.84 and select down $3.83. Fortunately, some light dressed cattle trade took place in the North at even money with last week. This may have set the stage for cash trade today for dressed cattle, but the jury is still out for live prices. Packers may not pay more for live cattle due to the recent decline of boxed beef. The March feeder cattle contract ceased trading on Thursday, with the April contract moving to the lead month, and is holding over an $8.00 discount to the index.

Hog futures closed higher in all contracts except for April. Most of the movement may have been in preparation for the release of the Quarterly Hogs and Pigs report. The overall report was neutral and may not have much influence on the market. All hogs and pigs on March 1 were up slightly, but as 100% of last year. Kept for breeding was slower than the average trade expectations at 99%. The trade was looking for 99.8%. Kept for marketing was 101% and right where the trade estimated. The hog weight breakdown was at 100% of a year ago for hogs under 50 lbs., 50 to 119 lbs., and 120 to 179 lbs. These were all below the trade expectations. Hogs over 180 lbs. were 102%, above a year ago and higher than expectations. Farrowing intentions were either at or below those of a year ago. The National Daily Direct Afternoon Hog report showed cash down $0.76. Cash may be higher today as packers need to finish purchases for the week. Pork cutout values declined $1.05.

	BULL SIDE		BEAR SIDE
1)	Steady cash trade for cattle should be supportive to the market, giving traders confidence to hold long positions.	1)	A steady cash cattle trade may be a disappointment to some traders, and selling on futures may develop ahead of the weekend.
2)	Live cattle futures regain the losses of Wednesday despite a further decline in choice boxed beef.	2)	Choice boxed beef fell $10.06 over the past two trading days. This does not bode well for the packer margins.
3)	The neutral Hogs and Pigs report may provide the confidence for traders to add to their long positions as they look ahead to increased demand.	3)	The mostly neutral Hogs and Pigs report may not trigger strong buying interest in hog futures.
4)	Hog futures may be developing a level of support and a double bottom on the charts that could increase buying interest.	4)	Both cash hogs and pork cutout prices remain choppy. Traders need to see more consistent, higher prices to regain the recent losses in futures.

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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