Friday Morning Livestock Market Update - Cattle Markets Grapple With Uncertainty

GENERAL COMMENTS:

Cash cattle have not yet traded, keeping traders uncertain over the strength of cash. Boxed beef prices were mixed, with choice down $1.68 and select up $0.26. The potential JBS plant strike is a cloud hanging over the market. As if the beef industry does not have enough uncertainty to grapple with, the "Family Grocery and Farmer Relief Act" was introduced on Thursday. It would require meat companies with product lines from more than one species to divest and limit their production to one species. Sen. Chuck Schumer, D-N.Y., introduced the bill on Thursday. Any foreign-owned meatpacking company would be required to sell its operations. The bill also would limit the number of cattle a packer could slaughter from a feedlot of more than 24,000 head to a maximum of 10% per day. At first glance, it seems this could increase beef prices to consumers rather than reduce them. This may heighten uncertainty and increase volatility.

Packers did not release any price change in the National Daily Direct Afternoon Hog report. This may continue the uncertainty in the nearby hog contracts. The April through July contracts eliminated the gains of Wednesday. The August and later months established new contract highs. Pork cutout values were up $0.60. Packers may not be aggressive in the cash market today as they likely have most of their needs purchased for the week. Weekly pork export sales were good at 36,100 metric tons, with Mexico being the largest buyer.

	BULL SIDE		BEAR SIDE
1)	Packers do not seem to have many cattle on hand and may need to be more aggressive in the cash market today.	1)	The potential for a strike at the JBS plant remains a possibility, and now the uncertainty over the "Family Grocery and Farmer Relief Act" bill may put pressure on futures.
2)	Boxed beef prices have increased significantly this week, indicating continued strong demand from consumers.	2)	Liquidation may take place ahead of the weekend due to the uncertainty of fundamental developments.
3)	Deferred hog contracts continue to make new highs as there is optimism over continued strong demand.	3)	The inability of nearby hog futures to extend gains on Thursday indicates prices may have a difficult time moving above resistance.
4)	Pork cutouts are beginning to find consistent overall support, which is supporting an uptrend.	4)	Deferred hog futures are becoming overbought and may be retraced at any time.