DTN Livestock Open: Futures May Drift

©Debra L Ferguson Stock Photography

At least the livestock complex was able to close mostly higher Thursday. It is considered a victory that cattle futures have been able to trend higher the past two days. Hogs continue the trend higher that does not seem to have an end in sight.

Cattle: Steady Futures: Mixed Live Equiv: $245.14 +0.44*
Hogs: Higher Futures: Higher Lean Equiv: $140.77 -0.33**
* based on formula estimating live cattle equivalent of gross packer revenue.
(The Live Cattle Equiv. 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 livestock complex was able to close higher in most futures contracts. It was another day of a fairly tight trading range in live cattle. Most of the attention of traders may have been turned toward the projections on the WASDE report Thursday for both grain and beef.

USDA raised their estimate for beef production this year by 5 million pounds to a total of 27.975 billion pounds this year and left production unchanged for 2022 at 27.405 billion pounds. They raised exports 15 million pounds to a total of 3.342 billion pounds this year and raised exports next year by 5 million ponds to a total of 3.300 billion pounds.

There was some light cash trade at steady money, which did not generate any excitement for traders. June cattle futures are running at a discount to cash with 2 1/2 weeks remaining for the contract. With the potential of boxed beef prices to reach a top soon, the contract may not need to move higher to converge to cash.

However, with strong demand, the seasonal weakness may not develop as early or even as much as anticipated. However, export sales may be indicating a slowing of international demand. Beef sales totaled 12,600 metric tons, down 55% from the previous week and 38% from the four-week average.

Exports totaled just 12,400 metric tons and a marketing year low. China was not listed as a buyer, but they were fourth on the list for imports from the U.S.

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