DTN Early Word Livestock Comments

Sarah Jungman
DTN Contributing Analyst

		Futures	Equiv
Cattle:	Lower	Lower	Live	$265.96	-$2.27	*
Hogs:	Lower	Mixed	Lean	$76.10	-$0.18	**

*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 markets continued their strength for the week, with feeders settling anywhere from $0.15 to $2.275 higher on Wednesday and live cattle contracts higher on every contract except the December. Nearby weakness can easily be explained by the recent weakness in the cash market. So far this week, there has been very little cash trade to report on. Iowa/Minnesota reported 210 live. The weekly slaughter to date is 325,000, which is 5,000 more than this time last week but 25,000 behind last year.

Lean hog futures closed 22.5 cents higher on the December contract Wednesday, while the deferred futures months settled anywhere from 22.5 to 50 cents lower. Nearby strength can be attributed to the expected holiday demand, but otherwise, hogs have a tough road ahead without something to spur this market in the other direction. Estimated average weights for barrows and gilts were reported Wednesday at 294.3 pounds on 872,000 head. This is up 0.8 pounds from last week and 2.4 pounds from this time last year.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures have traded down to the 9-day moving average and found support there so far.	1)	Expectations for Mexican cattle imports are for 200,000 head by the end of the year.
2)	Beef production is expected to further decline.	2)	USDA expects beef exports to decline 9.1% for the year, but the current pace is 10.3% lower.
3)	Nearby futures strength in lean hogs shows some confidence that holiday buying will bring short-term support.	3)	Higher average weights for hogs point to a possible backlog of hogs ready for market in barns.
4)	Higher pork demand is predicted for 2027.	4)	Higher hog weights also bring more pounds of pork to market per head, flooding an already weak market with more product.

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.

Sarah Jungman can be reached at sjungman@jpsi.com

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