Thursday Morning Livestock Market Update - Traders Grapple With Market Uncertainty

GENERAL COMMENTS:

Cattle futures posted triple-digit gains Wednesday with feeder cattle showing the most strength. This was the result of the market being overdone to the downside due to the impact that tariffs could have on trade. Short-covering took place as profits in short positions needed to be taken. The possibility of a compromise on trade could take place, which may limit the impact tariffs could have on beef trade. The strength on Wednesday was not from cash as some cattle were traded in Kansas $2.00 below last week and could set the stage for this week's trade. Boxed beef prices were lower with choice down $1.33 and select down $1.49. Packers continue to hold the line on the slaughter pace.

Hogs posted a nice reversal by opening higher and remaining higher throughout Wednesday. The tariff situation may be factored in and futures were oversold. Support also stemmed from the meeting to take place Thursday between President Sheinbaum of Mexico and President Trump. The outcome of these talks could result in some sort of compromise on trade and limit the impact it could have on pork exports. The National Daily Direct Afternoon Hog report showed cash of $1.07. Packers are not expected to be aggressive Thursday, resulting in lower cash. Pork cutout values declined $1.29. Slaughter was low on Wednesday due to the impact of winter weather as some plants were closed. Saturday slaughter is estimated at 92,000 head but that may increase as packers may add more to make up for the lower rate Wednesday.

	BULL SIDE		BEAR SIDE
1)	Further gains in live cattle futures may take place Thursday as the market corrects from being oversold.	1)	Dressed steer and heifer weights are 36 pounds heavier than a year ago, putting more beef on the market. This has packers reducing slaughter.
2)	If some compromises are reached between Mexico and Canada, the impact on beef trade could be minimal and futures may regain the losses.	2)	Limited cash cattle trade has developed at $2.00 lower, but it may set the stage for the rest of the week.
3)	Hog futures had a strong day Wednesday as the market corrected from being oversold. Further short-covering may take place Thursday.	3)	The bounce of hog futures may be short-lived unless cutouts can find consistent support.
4)	President Sheinbaum of Mexico and President Trump are reportedly going to discuss trade Thursday, which could result in a compromise on tariffs. This could limit the negative impact on pork trade.	4)	The uncertainty of tariffs on pork exports could limit the upside price potential of futures. Lower exports would be negative for prices.