DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $293.50 +$2.52*

Hogs: Lower Futures: Mixed Lean Equiv: $103.33 -$1.48*

*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:

Live cattle futures were somewhat reluctant to increase, but the strength of feeder cattle pulled them higher. June live cattle futures hold a discount to cash, which may not be maintained for very long. Cash is expected to be steady this week, which may result in higher trade to narrow the gap. However, there may be some apprehension due to the Cattle on Feed report being released on Friday. Boxed beef prices showed strong gains, with choice up $3.61 and select up $3.35. Retail demand remains strong as consumers prefer beef and are willing to pay for it. The May feeder cattle contract goes off the board on Thursday, with August then taking over as the lead month.

Hog futures continue to struggle with the June contract falling below support on Tuesday. This may open the way for further follow-through selling. Fundamental support remains elusive, leaving the market in a bearish mode. There was good movement on the National Daily Direct Afternoon Hog report, with the price down $0.01. Pork cutouts did not fare well, with values down $1.48. Bellies fell $5.24, and loins declined $3.69. However, the ribs jumped $5.25, helping to offset some of the weakness. There is little expectation for cash prices to show much strength ahead of the three-day weekend.

	BULL SIDE		BEAR SIDE
1)	China's reopening for U.S. beef imports is bullish for retail beef prices, if there is interest in or enough beef available for export.	1)	Traders may liquidate some of their long positions ahead of the Cattle on Feed report and the three-day weekend.
2)	Wildfires that were ignited in Kansas last week have burned more than 115,000 acres. The dryness and wildfires will further impact cattle supplies.	2)	Live cattle futures may struggle to move to new contract highs, as higher prices could trigger profit-taking and increased selling interest.
3)	The July and later hog contracts are still above support. Buying interest may increase at these low levels.	3)	Bullish fundamental support remains elusive. There are ample supplies of pork to meet increased demand.
4)	Retail interest should pick up as high-priced beef may be replaced somewhat by pork on the grill this summer.	4)	Packers are not expected to be aggressive with hog purchases the rest of this week due to the upcoming extended weekend.

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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