Friday Morning Livestock Market Update - Traders Wait For Cash Trade to Develop

GENERAL COMMENTS:

Thankfully, live cattle recovered from the lows on Thursday to post only minor losses. Feeder cattle moved similarly but closed with greater losses. Cash still has not provided solid direction as trading activity has been limited. So far some trade has taken place at steady money with last week, and some $2.00 lower. This leaves traders guessing and limits any reaction to the delay of tariffs on Mexico. Weekly export sales were lower than the previous week and year at 13,400 metric tons (mt). This was not a reflection of tariffs but a reaction to high beef prices. Boxed beef prices were mixed with choice down $0.42 and select up $0.98. Feeder cattle at auctions remain in strong demand but there have been some mixed prices this week. Feedlots were not as willing to write larger checks given the political uncertainty.

Hog contracts through August closed with triple-digit gains and fell into negative territory in later contracts Thursday. The delay of tariffs on Mexico and Canada for goods covered under the USMCA trade agreement provided support to the market. The National Daily Direct Afternoon Hog report showed packers remained aggressive with cash up $0.49. Cutouts gained only a penny from the previous day at $96.49. Hog futures have posted strong gains over the past two days, but it is too early to tell whether futures have established strong support. Weekly export sales were strong at 42,400 mt. Saturday slaughter was revised higher to 96,000 head as the packers wanted to make up for lower slaughter due to the weather earlier in the week.

	BULL SIDE		BEAR SIDE
1)	If cash cattle trade is steady this week, it should support live cattle futures. Traders feel the market may have found a bottom.	1)	High beef prices seem to have impacted demand for the time being. Traders may remain cautious ahead of the weekend, keeping the upside price movement limited.
2)	The delay of export tariffs on Mexico and Canada again may provide support as meat trade may not be disrupted for at least another month.	2)	Steady cash trade may already be factored in the market, and the strength in live cattle futures limited.
3)	Hogs showed strong gains on the delay of tariffs on goods covered under the USMCA agreement. More time allows for further negotiations and could result in no tariffs.	3)	Packers likely have sufficient hogs purchased for the week. Cash is expected to be lower Friday.