Tuesday Morning Livestock Market Update - Tariffs Have Been Delayed for a Month

GENERAL COMMENTS:

The extreme bearishness in the feeder cattle futures was due to the resumption of feeder cattle imports from Mexico into the U.S. The other part of the equation was the tariffs that were to be imposed on Canada and Mexico and the uncertainty of what that was going to do to beef exports. However, the tariff situation changed throughout Monday. Both President Trump and Mexico agreed to put tariffs on hold for one month. Later in the day, Canada also is making commitments, putting tariffs on hold as well, pausing them for at least one month. That could significantly change the market Tuesday as the delay of those tariffs might result in some buying interest as traders may get back into the market to take advantage of the lower prices. There is no doubt futures will remain volatile in the near term. The overall fundamentals of the cattle market have not changed. Boxed beef prices were higher with choice up $4.31 and select up $2.77 indicating continued strong consumer demand.

The potential for tariffs hit the hog market hard but that may follow the same pattern as cattle now that the tariffs have been put on hold for 30 days. Cash prices were not released Monday due to packer confidentiality. We did see cutout values down $0.94, continuing the uncertainty of overall demand. The February contract closed $.15 higher as it needs to stay in line with cash due to it moving closer to expiration. Later contracts were hard hit with triple-digit losses, taking the June contract below $100 and July remaining just slightly above $100. The whole complex was under a bearish cloud Monday but with the lower prices and the change of the tariff news, traders may step back into the market to buy the break.

	BULL SIDE		BEAR SIDE
1)	Tariffs with Mexico and Canada were put on hold for 30 days, which could result in traders becoming more aggressive buyers of cattle futures Tuesday as they want to take advantage of the break in prices.	1)	The resumption of cattle imports from Mexico this week may leave traders cautious. The selling pressure could continue Tuesday.
2)	The bullish numbers on the cattle inventory report should provide support under the market. Cattle supplies are tight and will remain that way.	2)	The feedlots may be anxious to sell cattle this week in case further bearish news surfaces. They may have less desire to hold cattle longer than necessary.
3)	The tariffs with Mexico and Canada being put on hold for 30 days could result in traders stepping back into the hog market to take advantage of the break in prices.	3)	Lower pork cutouts do not indicate demand is increasing and may limit the upside price potential.
4)	The packers are expected to be more aggressive in the cash market as they need to purchase hogs to maintain slaughter.	4)	Traders may not be anxious to buy hog futures aggressively do to the uncertainty over international demand.

Monday Closing Livestock Market Update - Heavy News-Hitting Weekend Made for Struggle for Complex

GENERAL COMMENTS:

Although last Friday's Cattle Inventory report was about as bullish as it could be, the news that broke over the weekend about tariffs being placed on Mexico and Canada along with Mexico cattle imports soon to resume took a toll on the livestock contracts on Monday. March corn is up 6 3/4 cents per bushel and March soybean meal is up $2.60. The Dow Jones Industrial Average is down 122.75 points.

LIVE CATTLE:

The live cattle complex suffered the same stress that the rest of the livestock contracts did as Monday's market was a smorgasbord of incoming chaos. As traders attempted to sort through the weekend's news of tariffs going to be imposed on Mexico and Canada, and Mexico to soon again be importing cattle in the U.S. -- traders had a lot on their plate when the markets opened at Monday's start. February live cattle closed $1.62 lower at $202.97, April live cattle closed $2.15 lower at $200.15 and June live cattle closed $2.22 lower at $194.47. New showlists appear to be mixed, higher in Nebraska/Colorado, somewhat higher in Kansas, but lower in Texas. Monday's slaughter is estimated at 115,000 head -- 1,000 head more than a week ago and 8,000 head less than a year ago.

Last week Southern live cattle traded at mostly $208 which is $6.00 to $7.00 higher than the previous week's weighted average. Northern dressed cattle traded from $325 to $330, but mostly at $330 which is steady with the previous week's weighted average. Last week's negotiated cash cattle trade totaled 58,816 head. Of that, 87% (50,904 head) were committed to the nearby delivery, while the remaining 13% (7,912 head) were committed to the deferred delivery.

Boxed beef prices are higher: choice up $4.31 ($331.99) and select up $2.77 ($319.84) with a movement of 89 loads (48.84 loads of choice, 18.70 loads of select, 6.98 loads of trim and 14.08 loads of ground beef).

TUESDAY'S CATTLE CALL: Steady. Given that packers were able to get the vast majority of last week's cattle committed to the nearby delivery, they'll likely use the board's weakness as leverage and try to get cattle bought for steady money this week.

FEEDER CATTLE:

To say it was a stressful day for the feeder cattle complex is beyond an understatement. And while chatter about tariffs did indeed affect the market, the biggest, unsettling news that seemed to affect the feeder cattle complex was APHIS's announcement over the weekend that Mexican cattle are again going to begin to be imported into the US any day now. What's frustrating about their announcement is that it comes with little detail: they don't say how the backlog of feeders is going to be imported, or when they will exactly begin to cross the board again. Nevertheless, the emotional turmoil sent the feeder cattle contracts spiraling lower even though just last week new all-time highs were scored in the fed cash cattle market yet again. March feeders closed $5.22 lower at $270.50, April feeders closed $5.30 lower at $269.82 and May feeders closed $5.15 lower at $267.97. At Joplin Regional Stockyards in Carthage, Missouri at their midsession point and compared to last week, feeder steers and heifers were selling $5.00 lower to $5.00 higher. Feeder cattle supply over 600 pounds was 65%. The CME feeder cattle index 1/31/2025: not available at this time.

LEAN HOGS:

Although there have already been positive conversations between President Trump and Mexico's President Claudia Sheinbaum Pardo, which have delayed the Mexico import tax going into effect for at least a month, the lean hog complex still dove sharply lower through Monday's close as hog producers are on pins-and-needles given that Mexico is the largest export market for US pork. April lean hogs closed $4.00 lower at $86.35, June lean hogs closed $3.65 lower at $99.35 and July lean hogs closed $3.22 lower at $100.32. It wasn't helpful either that pork cutout values closed slightly lower, as traders need to see strong and stable demand. Hog prices on the Daily Direct Afternoon Hog Report are unavailable because of confidentiality. However, we can see that only 2,179 head traded, and that the market's five-day rolling average now sits at $83.32. Pork cutouts totaled 346.24 loads with 314.19 loads of pork cuts and 32.05 loads of trim. Pork out values: down $0.94, $93.81. Monday's slaughter is estimated at 491,000 head -- 8,000 head more than a week ago and 3,000 head more than a year ago. The CME lean hog index 1/30/2025: up $0.42, $83.06.

TUESDAY'S HOG CALL: Steady/somewhat higher. Packers should show more interest in Tuesday's market given that they weren't overly aggressive on Monday.

Monday Midday Livestock Market Summary - Traders Try to Wrap Their Heads Around the Market With Little Success

GENERAL COMMENTS:

As the market tries to sift through the slew of announcements that came over the weekend -- stemming from APHIS's announcement that Mexican cattle imports are to resume any day, or the announcement that tariffs will be imposed on both Mexico and Canada. Traders are having a difficult time finding traction in Monday's market. March corn is up 5 1/4 cents per bushel and March soybean meal is up $0.60. The Dow Jones Industrial Average is down 61.28 points.

LIVE CATTLE:

One would have logically expected the live cattle complex to be trading higher this week as Friday's Cattle Inventory report clearly showed that there were fewer beef cows and heifers in the United States compared to a year ago. But what seems to be overclouding that bullish fundamental fact is that on Saturday, Feb. 1, APHIS announced that cattle imports from Mexico are going to resume any day now. We don't know how many cattle are going to come, or when specifically, but these two questions alone are enough of a reason for the live cattle complex to be trading lower, like it is. February live cattle are down $0.90 at $203.70, April live cattle are down $2.00 at $200.30 and June live cattle are down $2.10 at $194.60.

Last week Southern live cattle traded at mostly $208 which is $6.00 to $7.00 higher than the previous week's weighted average. Northern dressed cattle traded from $325 to $330, but mostly at $330, which is steady with the previous week's weighted average. And depending on where the week's weighted averages land, it's likely that these prices are again (for the fifth week in a row) new record setting prices.

Boxed beef prices are higher: choice up $3.55 ($331.23) and select up $3.74 ($320.81) with a movement of 40 loads (20.17 loads of choice, 9.88 loads of select, zero loads of trim and 10.17 loads of ground beef).

FEEDER CATTLE:

Upon the announcement from APHIS over the weekend that cattle imports from Mexico are going to resume any day now, it comes as no surprise to see the feeder cattle market distressed over the matter. The biggest fear the feeder cattle complex has is that Mexican imports could add more supply to the market and negatively affect prices. March feeders are down $4.15 at $271.55, April feeders are down $4.20 at $270.65 and May feeders are down $4.25 at $268.87.

LEAN HOGS:

The lean hog complex has plummeted lower Monday morning as market participants try to make sense of the slew of announcements that broke over the weekend. While President Trump announcement earlier Monday morning that Mexico won't have tariffs imposed on it for at least another month, the market is trading in an unraveled fashion as U.S. pork producers are concerned about their ability to export pork into Mexico as they're our biggest export market. February lean hogs are down $0.07 at $84.10, April lean hogs are down $4.00 at $86.35 and June lean hogs are down $3.37 at $99.62.

The projected lean hog index for 2/3/2025 is up $0.29 at $83.77, and the actual index for 1/30/2025 is up $0.42 at $83.48. Hog prices are unavailable on the Daily Direct Morning Hog Report because of confidentiality. However, we can see that only 165 head have traded, and that the week's five-day rolling average now sits at $83.84. Pork cutouts total 179.46 loads with 166.84 loads of pork cuts and 12.62 loads of trim. Pork cutout values: up $0.43, $95.18.

Monday Morning Livestock Market Update - Bullish Cattle Inventory Report To Provide Further Support

GENERAL COMMENTS:

The cattle complex was able to close mostly in positive territory Friday after the previous two days of selling pressure. The market had adjusted to the higher cash cattle trade. Cash in the South traded $6.00 to $7.00 higher with dressed cattle in the North up $2.00, which provided some good support under the market going into the weekend. However, prices had declined from where they were earlier in the week prior to cash cattle trading. The market had to correct to get in line with cash. Boxed beef prices were higher with choice up $.20 and select up $1.17. Slaughter levels were lower than they were the previous week and a year ago. Packers are trying to limit slaughter to try to back up some cattle in the country. The feedlots are in the driver's seat and continue to hold cattle, causing packers to bid higher to get enough cattle for slaughter. The cattle inventory report was bullish as it showed lower cow numbers and lower heifer numbers than a year ago. That should keep cattle supplies somewhat tight for the next one or two years unless we see something else that has major impact on the market. We may not see cattle prices decline to any great extent other than price retracements, but the downside may be limited to some extent. Feeder cattle should remain supportive as there is good demand for feeder cattle and calves in the country. Early expectations for cash this week are for steady to higher. Feedlots will hold for higher cash again and hold cattle over if they do not receive the prices they want. The Commitments of Traders report showed fund traders buying 6,885 futures contracts in live cattle, bringing their net-long position to 156,909 -- a new record long. Funds sold 496 feeder cattle futures, reducing their net long to 29,375.

Hog futures struggled Friday with the April contract taking the brunt of it. There is concern over ongoing demand for pork. We have not been able to see consistency in underlying cash and pork cutouts. As long as that uncertainty continues, we may see a choppy market and the upside may be somewhat limited. The National Daily Direct Afternoon Hog report showed cash at $2.81 Friday with a weighted average of $83.43. It is unusual to see cash hogs that strong on a Friday. Monday might see some lower cash trade as the packers assess weekend demand. Pork cut outs gained $1.82. Price retracements will probably be bought into by the funds as they are looking at it for the long term. The Commitments of Traders report showed the funds reducing their net-long position by 213 contracts, bringing their net position to 91,937.

	BULL SIDE		BEAR SIDE
1)	The Cattle Inventory report should continue to support the market for the rest of this year and likely all of next year.	1)	The cattle market is overbought and moving closer to a possible price correction. The funds are holding a record-long cattle futures position.
2)	Cash cattle are expected to be higher this week due to continued tight supplies. Feedlots are in control and are willing to hold cattle if they do not receive the prices they ask for.	2)	Feeder, cattle imports are resuming from Mexico. There will be stricter protocols for testing before they will be able to come over the border. That could limit the upside potential for cattle in the near-term, possibly triggering some selling.
3)	Higher cash and cutouts on Friday may provide support Monday and possibly see further gains this week as it seems hog supplies might actually be tightening.	3)	Hog futures closed below support Friday, which could increase the selling interest from traders as they try to take some profits ahead of a possible further price decline.
4)	The price declines in hog futures Friday might have been a price retracement with traders willing to buy the break.	4)	Cash hogs are expected to be lower, as is usual for a Monday. Packers may wait to see how the weekend demand was before purchasing hogs more aggressively.