DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv: $287.91 -$0.65*

Hogs: Lower Futures: Mixed Lean Equiv: $101.08 -$1.49**

*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 began Thursday without fanfare with a steady to slightly higher open. As the day progressed, so did the buying interest. The gains were not fueled by actual cash cattle trade, but by the anticipation of no worse than steady cash. Feedlots may hold out to obtain higher prices or carry cattle over to next week. The market has taken the news of the New World screwworm in stride and looked to the fundamentals of supply. No new cases have been reported in the past few days, providing confidence that the spread might be minimal. No cash cattle have traded, making today an interesting day. Boxed beef prices were lower on Thursday, with choice down $0.08 and select down $2.46.

Hog Futures finally posted minor gains in the August and later contracts after five consecutive days of losses. This does not mean a bottom has been found. However, traders may liquidate some of their short positions ahead of the weekend due to the market's oversold condition. Neither cash nor cutouts are providing much fundamental support to the market. The National Daily Direct Afternoon Hog report showed cash down $0.26. The packers likely have purchased much of what they need and will remain unaggressive Friday. Pork cutout values declined by $1.49. Friday is the final day to trade the June contract with July moving to the lead month.

	BULL SIDE		BEAR SIDE
1)	Steady to potentially higher cash cattle trade is expected Friday, which should support the market as the June contract carries a discount.	1)	Boxed beef prices have been choppy. This may limit the upside price potential of futures.
2)	So far, no further cases of the New World screwworm have been discovered. Traders are focusing on the fundamentals.	2)	Packers may not need to be aggressive this week as they have already purchased some cattle for deferred delivery. Feedlots may have to sell at a steady to lower price if they need to move cattle.
3)	Hog futures are significantly oversold and the bounce on Thursday could carry through Friday as traders may cover shorts ahead of the weekend.	3)	Weekly pork exports were 40% below the previous week and down 26% from the four-week average.
4)	Hog futures have held support at the November lows. The aggressive selling interest may have run its course.	4)	Market-ready hogs remain plentiful. Packers do not need to be very aggressive in the cash market to obtain the hogs they need.

NOTE:

The cattle complex has seen record-high prices in the last year. But it's also been saddled with record-high risk and volatility, among many other challenges. To better understand these cattle market challenges, join DTN Livestock Analyst ShayLe Stewart for the inaugural Beef Industry Exchange webinar hosted by Senior Livestock Editor Jennifer Carrico at 9 a.m. CDT on June 24.

In addition to ShayLe's cattle market update, DTN Ag Meteorologist John Baranick shares how variability and a building Super El Nino might save or doom U.S. pastures. Due to widespread drought conditions across the U.S., cow-calf producers may be considering a reduction of the herd. To prepare for this, University of Nebraska Lincoln Beef Systems Extension Educator Aaron Berger shares different strategies to set up cow herd rebuilding when it rains again. Register for the free webinar today: https://dtn.link/….

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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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