DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $277.53 +$2.11*

Hogs: Higher Futures: Higher Lean Equiv: $93.74 +$0.61**

*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:

Cash cattle trade was limited before the market close. The cattle that had been traded were traded at steady money. Later trade showed some weakness, with live cattle sales in the North at $1.00 lower and dressed sales as much as $5.00 lower. Some of this had to do with the ICE enforcement action in Kansas packing plants that disrupted slaughter. According to USDA's daily slaughter reports, fed-cattle slaughter was down nearly 9% on Wednesday and 16% on Thursday. It is difficult to say whether this will be made up this week or if it will just be business as usual without much effort made to regain the losses under current fundamentals. Boxed beef prices were higher on Friday, with choice up $2.71 and select up $3.66. The Commitment of Traders report showed fund traders adding 1,394 live cattle futures contracts, bringing their net long position to 49,090. They increased their long position in feeder cattle by 794 contracts to a net long position of 8,005 contracts.

Hog futures could not find support during the second half of the week as futures lost the gains early in the week. Traders could not find anything bullish to increase their desire to buy the weakness. Pork cutouts were up $0.64, but that may not be sufficient to generate buyer interest to begin the week. The National Daily Direct Afternoon Hog report showed cash down $0.27. Fundamental support is limited, with a friendly Hogs & Pigs report last week failing to generate any desire to establish long-term positions in the market. The Commitment of Traders report showed fund traders as net sellers of 4,372 futures contracts, reducing their net short positions to 42,140.

	BULL SIDE		BEAR SIDE
1)	The packers in Kansas may make up for their reduced slaughter pace last week as a result of the ICE raids.	1)	Cash weakness is likely to keep the upside in cattle futures limited. The packers are monitoring the recent ICE situation in Kansas.
2)	Cattle futures seem to be finding support as traders anticipate cattle prices to hold.	2)	Cattle futures had a chart gap below the market that may be filled sooner rather than later.
3)	Hog slaughter continues to remain strong, indicating there is good demand, or packers would not maintain the increased slaughter pace.	3)	Hog futures are struggling to find support. It is difficult to say whether contract lows will hold.
4)	Technical buying may increase as hog futures retest support.	4)	Traders continue to implement short-term trades to attempt to take a profit and have little interest in establishing long-term positions.

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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