DTN Early Word Livestock Comments 05/24 06:40

DTN Early Word Livestock Comments 05/24 06:40 An Uncertain Open for Cattle The strength of livestock futures last week built a good foundation for follow through gains this week. The reaction to the Cattle on Feed report will be difficult to anticipate and will be the wild card as trading opens for cattle. Hog futures should add to the gains of last week. Robin Schmahl DTN Contributing Analyst Cattle: Steady Futures: Mixed Live Equiv: $236.69 +0.64* Hogs: Steady Futures: Higher Lean Equiv: $127.55 +1.63** * 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: All in all, the livestock complex performed very well last week with futures up nicely from the previous week. Friday's strength was even in the face of the Cattle on Feed report. It seems as if traders really did not care much about it as an accurate comparison could not be made to the previous year due to the impact of COVID-19. Two things were going to take place once the numbers were released. One is to compare the actual with the estimate, which is always done and has an impact on traders. The average trade estimate for on feed was 103.7% with the actual released at 104.7% and will be viewed by the trade as bearish. Then there was the estimate for placements at 120.8% with the actual at 127.2%, which the trade will view as bearish. The average estimate for marketings was 133.6% with the actual at 132.6% and will be viewed as bearish. Remember, I indicated traders react to how numbers fall in comparison to the estimates. The second comparison will be made in correlation to 2019 as we might as well throw out 2020. A comparison to 2019 actually shows a more bullish Cattle on Feed report. There were fewer cattle on feed and with more cattle marketed. This may leave traders in a quandary Monday possibly leaving them to focus on the cash market and grain prices. Packers may need to be more aggressive this week due to minimal purchases the past two weeks.