Thursday Morning Livestock Market Update - Early Cash Cattle Trade Points to Lower Prices

GENERAL COMMENTS:

Cattle futures pushed higher after a week of aggressive liquidation. This was good as it corrected an overbought market. The fundamentals did not change as cattle supplies are tight and will remain that way for a time. Concern over the impact of tariffs on demand left traders uneasy and triggered the selling. Much of that has now been digested. However, the recent pressure on futures and the uncertainty in the market may result in feedlots being willing to move cattle more aggressively rather than holding out for higher cash that may not be attainable. Some light cash trade took place $1.00 to $3.00 lower. The recent decline in futures and the developing tariff situation may be a warning shot over the bow. Boxed beef prices were lower on Wednesday with choice down $5.39 and select down $3.08.

Hogs extended the rebound with the potential for futures to reach back to the highs. Cash was strong with the National Daily Direct Afternoon Hog report showing a gain of $1.31. Packers may not be aggressive Thursday as buying may be mostly finished for the week. Pork cutouts were down $0.93. Traders are optimistic about the potential for pork demand after the tariff news was digested and tariffs on Mexico and Canada were put on hold. Hog slaughter continues to remain strong, keeping supplies current. There have been some indications that hog numbers may not be as large as reported, which may be one reason why prices are at current levels. However, packers continue to find sufficient hog numbers without difficulty.

	BULL SIDE		BEAR SIDE
1)	Cattle futures rebounded after the liquidation, indicating the market was overdone to the downside and traders wanted to take advantage of it.	1)	A few cattle sold on Wednesday at $1.00 to $3.00 lower. This may set the stage for cash for the rest of the week. Feedlots may be more anxious to sell with the uncertainty of the cash market.
2)	Cattle numbers are tight and there are no indications this will change anytime soon. The cattle herd is showing little sign of rebuilding.	2)	Boxed beef prices fell substantially on Wednesday with further weakness expected as beef demand may slow.
3)	Traders bought the break in hog futures in anticipation of stronger demand and better pork prices. Hog weights are holding slightly below a year ago.	3)	Hog weights are 0.1 pounds below a year ago, averaging 290.7 pounds, leaving a plentiful pork supply available. The packers have not had to chase after hogs.
4)	The hog market may have found a level of support and any break in the futures market may be viewed as a buying opportunity.	4)	It may be difficult for hog futures to push to new highs with the uncertainty of tariffs hanging over the market. Any slowing of demand could put pressure on the market.