GENERAL COMMENTS:
The meltdown in the outside markets triggered liquidation throughout the cattle complex Friday, with some live cattle contracts closing the $6.50-limit down. This leads to expanded limits Monday of $9.75. Feeder cattle closed the $8.25-limit lower in some contracts with expanded limits of $12.25 Monday. Overnight financial markets worldwide were under substantial pressure, with futures indicating further losses in U.S. markets. Cattle are expected to respond with follow-through selling as continued liquidation takes place. One financial firm predicts a 50% chance of a recession. The fear is the impact on demand, not only worldwide due to reciprocal tariffs but also the reduction in domestic demand. Cash cattle traded lower last week with limited activity. Southern live cattle traded $1.00 to $2.00 lower and Northern live cattle at $3.00 to $5.00 lower. Dressed cattle ranged from $335 to $345. Boxed beef prices were mixed with choice up $0.08 and select down $0.66. The Commitments of Traders report showed fund traders adding 2,534 futures contracts in live cattle, bringing their net-long position to 139,126 contracts. They reduced their long position in feeder cattle by 592 contracts with a net-long position of 31,912. This report is from Tuesday, April 1, and does not reflect the activity at the end of the week.
Hog futures were not immune to the rampant selling Friday with some contracts closing down the daily limit of $4.00, bringins expanded limits of $6.00 Monday. The June contract closed at the lowest level since Aug. 29, 2024. Follow-through selling is expected Monday as outside overnight markets are again showing substantial losses. The National Direct Afternoon Hog report showed cash down $0.27 on 2,167 head. Pork cutouts performed well, posting a gain of $1.43, with bellies providing support, gaining $7.72. Packers are not expected to be aggressive Monday as they assess the market. The Commitments of Traders report showed fund traders adding 1,007 long futures positions, bringing their net-long position to 57,540 contracts.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle supplies remain tight and will remain that way for quite some time. A decline in futures will not change that. |
1) | Overnight, world financial markets are lower with futures indicating further losses in U.S. markets. This will result in further selling in cattle futures. |
| 2) | Both live and feeder cattle futures gapped lower Friday. Those gaps may be filled at some point once the market settles down. |
2) | One financial firm indicates a 50% chance of a recession taking place. This would impact beef demand due to high prices. |
| 3) | Hog futures had already anticipated some of the pressure of export tariffs and may find support sooner rather than later. |
3) | China is a significant buyer of pork and reciprocal tariffs of 34% may impact exports to them. |
| 4) | Hog futures gapped lower Friday and never looked back. The gaps may be filled once the selling runs its course. |
4) | Further liquidation in hog futures is likely as the close below technical support may continue the selling. |
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