Thursday Morning Livestock Market Update - Outside Market Pressure May Push Futures Lower

GENERAL COMMENTS:

Cattle futures extended the gains Wednesday with the April through October live cattle contracts closing at new highs. Feeder cattle followed a similar pattern with the August and later contracts closing at new highs. Cattle futures have been impressive as demand has remained strong and cattle supplies remain tight. Futures are expected to trade lower Thursday due to the impact of the tariff announcement on Wednesday, resulting in substantial pressure on the overnight equity markets. It is difficult to determine the impact, but there is fear that a trade war could escalate, increasing prices for food and other goods. Cash cattle have not yet traded this week, with some offers posted $2.00 higher than last week. Boxed beef declined with choice down $2.32 and select down $3.24.

Hog futures closed mixed Wednesday, rebounding from earlier lows. Futures were mixed with some light spread trading. Traders seemed more cautious over the potential impact of tariffs on international pork demand. Packers were more aggressive as they stepped up to increase ownership of hogs. The National Daily Direct Afternoon Hog report increased $0.62 with a weighted average of $88.88. There is a strong possibility they need more hogs and will pay more Thursday. Pork cutouts did not fare well as prices declined $1.81. Some pressure might be seen on futures due to the outside pressure from other markets in response to the tariffs, but there may not be as much impact as traders have been cautious over the past month.

	BULL SIDE		BEAR SIDE
1)	New highs in cattle futures are a testimony to the market's resilience and continued consumer demand.	1)	Outside market pressure in response to tariffs may trigger substantial selling in cattle futures.
2)	The feedlots may be determined to receive at least steady money for cash this week, gaining confidence due to the strong futures market.	2)	Packers may not be willing to pay more for cattle as export demand has been slowing. The weekly export sales report is expected to show lower sales.
3)	Hog futures continue to hold support with buying interest on price weakness. Pork demand should remain steady or increase over time.	3)	Hog weights continue to increase with the weekly average reaching 291.4 pounds, up 0.7 pounds from the previous week and up 4.3 pounds from a year ago.
4)	Increasing tariffs on many items will tighten consumers' budgets. Buying habits will change, and pork may be a recipient due to value.	4)	Lower cutouts and outside market pressure due to the implementation of tariffs might push hog futures lower.