Friday Morning Livestock Market Update - New Farm Bill Contains Various Livestock Provisions

GENERAL COMMENTS:

The April live futures contract went off the board at $258.47. The June contract is now the lead month and is over $4.00 lower. The strength of the cash cattle trade this week may result in this discount being quickly eliminated. However, traders may wait until they see the interest in cash trade next week. This week has been exceptionally strong with Southern cash sales averaging $9.00 higher and Northern dressed cattle as much as $14.00 higher. Boxed beef closed higher with choice up $1.47 and select up $1.92. The House of Representatives passed a new farm bill, which will move on to the Senate. In the bill, there are proposals that would reshape the meat industry, such as beef labeling transparency, international trade, expansion of small meat processors, state inspection authority, and consumer information about alternative proteins.

Hog futures eliminated the gains of Wednesday. When follow-through buying failed to develop, liquidation was triggered. Cash was $0.61 lower on the National Daily Direct Afternoon Hog report. Pork cutout values declined by $0.43. The action on Thursday may result in contracts retesting the lows. The House passed a new farm bill. Included in the bill is the Save Our Bacon Act, introduced by U.S. Representative Ashley Hinson, R-Iowa, last year. This act aims to protect access to interstate commerce and to alleviate overregulation by prohibiting state and local governments from dictating livestock production requirements in other states.

	BULL SIDE		BEAR SIDE
1)	Strong cash cattle trade this week should maintain support in cattle futures.	1)	High beef prices may impact beef demand this summer as consumers continue to grapple with high fuel prices.
2)	June live cattle futures are now the lead month and are at a discount to the current cash market. This discount may be reduced.	2)	Weekly beef export sales were good but not exceptional. High prices may further curtail export business.
3)	Hog futures fell back near support. Traders may step back into the market in anticipation of support holding.	3)	The August hog contract has a chart gap below the market that likely will be filled. Further weakness will need to take place to accomplish it.
4)	Packers may need more hogs to finish out the week and may be aggressive in the cash market.	4)	The failure of follow-through buying in hog futures on Thursday does not bode well for stronger prices anytime soon.