Monday Morning Livestock Market Update - Equity Markets to Influence Trading

GENERAL COMMENTS:

Traders became disillusioned as Friday progressed, as the cash cattle trade remained light and what trade took place was not promising. Southern live trade was mostly from $209 to $210, $1.00 lower than the previous week. However, the Northern dressed cattle trade ranged from $335-3$45 with a major packer paying $335 and a regional packer paying $345, which was $10.00 higher than the previous week. The cattle market is alive and well, even though futures closed lower and the market has not been able to extend its gains to new highs since the Cattle on Feed report. Cash trade should support the market even though boxed beef prices were lower. Choice declined by $2.90 with select down by $0.76. The largest influence on the trade this week might be the equity markets and how they perform as tariffs are implemented. There is a fear of a recession which could impact consumer demand and top the market despite tight cattle numbers. The Commitments of Traders report showed fund traders adding 18,563 long live cattle futures positions, bringing their net-long to 136,592. They bought 2,966 futures in feeder cattle to bring their net-long position to 32,504.

Hog futures opened substantially higher Friday in reaction to the bullish Hogs and Pigs report, but the strength faded as traders sold the strength based on current fundamentals. The report showed price should be supported in time if demand holds or improves. The current market is struggling to find that support as cash and cutouts need to reflect increasing demand and tighter hog numbers. Slaughter remains strong, but higher weights supply sufficient pork to the market. The National Daily Direct Afternoon Hog report showed cash up $0.21 as packers needed to finish purchases. Pork cutouts gained $1.72. The Commitments of Traders report showed fund traders as net sellers of 3,540 futures contracts, reducing their net-long position to 49,135.

	BULL SIDE		BEAR SIDE
1)	The higher cash paid for dressed cattle should provide support. Packers needed to step up as they were short-bought.	1)	Cattle futures have not been able to push to new contract highs since the Cattle on Feed report. This may indicate the market may have run its course and new highs may be difficult to attain.
2)	April is the traditional start to the grilling season, which may increase demand for beef. Slaughter has already been running higher.	2)	The weakness in the Southern live cattle trade last week may indicate that feedlots may need to move cattle and may not be able to hold out for higher prices.
3)	The Hogs and Pigs report was bullish and should support the market over time. Many times, the numbers on the reports are traded a day or two after the release as traders focus on the results rather than emotion.	3)	There does not seem to be any significant increase in pork demand due to high beef prices. Consumers have not turned to add more pork to their diets.