DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $267.94 -$2.46*

Hogs: Lower Futures: Mixed Lean Equiv: $110.05 -$1.32**

*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 bottom fell out of cattle futures as selling emerged after the bounce on Tuesday. Feeder cattle fell to support set in early June. Continued weakness could trigger further liquidation. Some positioning may surface ahead of the report. Packers have lowered their bids and may hold as they already have some cattle forward purchased. Cash business is not expected to surface until late Friday, with feedlots hoping for some good news from the Cattle on Feed report. However, with the current market trend, it may not make any difference in the short term. Boxed beef prices took a hit on Wednesday with choice down $3.41 and select down $3.66. The Cattle on Feed report will be released on Friday. The average trade estimate is for on-feed numbers as of July 1 at 102.2% with a range of 101.1% to 103.3%. Placements in June at 98.8% with a range of 93.7% to $106.0%. Marketings in June at 97.0% with a range of 94.9% to 98.0%.

Hogs maintained the uptrend with moderate gains in all but the nearby August contract. There has been a significant amount of short-covering as the market fundamentals became positive. Improved demand has resulted in packers being more aggressive in the cash market. The National Daily Direct Afternoon Hog report on Wednesday showed cash up $0.86 on a substantial volume traded. Packers are not expected to be aggressive Thursday as they may have most of their hogs purchased for the week. Pork cutouts did not fare as well, with values declining $1.32. The lean hog index was up $0.48 to 96.64.

	BULL SIDE		BEAR SIDE
1)	Feeder cattle futures are oversold and near support. Short-covering could take place with some bottom-picking possible.	1)	Cash cattle and boxed beef prices continue to weaken, increasing the liquidation of cattle futures.
2)	Some positioning ahead of the Cattle on Feed report could support the market as traders may not want to press the market any lower.	2)	If the estimate for cattle on feed as of July 1 comes to fruition at 102.2%. It would be the highest number for the July report since 2022.
3)	Hog futures are in an uptrend, and demand is good. This may give traders the confidence to purchase for the long term.	3)	Hog futures are overbought and could correct at any time. A bull market needs to continue to be fed.
4)	Weekly hog weights declined 2.9 pounds last week to an average of 283.2 pounds.	4)	Weekly hog weights remain 0.3 pounds above a year ago. This leaves more tonnage available to the market.

For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CDT. 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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