DTN Early Word Livestock Comments

Cattle: Steady Futures: Lower Live Equiv: $289.96 -$0.32*

Hogs: Higher Futures: Higher Lean Equiv: $101.94 -$1.46*

*Based on the formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. The index has been updated to depict recent changes in live cattle weights and grading percentages.)

** based on formula estimating lean hog equivalent of gross packer revenue.

GENERAL COMMENTS:

Cattle futures opened higher on Tuesday, likely off the news that President Trump was to delay the signing of the executive order to eliminate tariffs on beef for 200 days due to the 16% surge in beef imports over the past year. Beef imports are projected to reach as much as 6 billion pounds this year. This would be a record volume. However, the uncertainty created in just two days was too much for fund traders to feel comfortable holding all of their long positions. So, even though cash is expected to remain steady or increase this week, uncertainty has gained the upper hand. Boxed beef prices were lower, with choice down $0.49 and select down $0.22. There may be follow-through selling today, adding to the recent volatility.

Hog futures are unable to find consistent support, with prices falling back on Tuesday. The June contract made new lows as it had carried about a $10.00 premium to the May contract before Tuesday's trade. May goes off the board on Thursday, with June taking over the lead month. The market received no support from pork cutouts, as values declined by $1.46. There was no price change released on the National Daily Direct Afternoon Hog report due to no price change being released Monday. Packers were more aggressive with a significant volume of hogs purchased and are likely to remain aggressive today with higher cash expected.

	BULL SIDE		BEAR SIDE
1)	Cash trade is expected to be no less than steady this week, with higher prices possible based on a few trades on Monday at $2.00 to $3.00 higher.	1)	Cattle futures have established a downtrend over the past two weeks, even though cash traded higher. Sometimes, futures know where the cash will go.
2)	Cattle futures have corrected from being overbought, which may have traders willing to buy back into the market.	2)	The positive news from the delay in signing the executive order to allow more beef imports failed to support the market. That may increase market negativity.
3)	Hog futures have been under pressure for an extended period of time, with prices low enough for traders to step back into the market for the long term.	3)	June hog futures made new lows on Tuesday and still hold about an $8.00 premium to the May contract.
4)	Hog slaughter continues to exceed the previous year, indicating that demand has and is improving.	4)	Fund traders continue to reduce their long positions, according to the recent Commitment of Traders report.

For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.

Robin Schmahl can be reached at rschmahl@agdairy.com

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