DTN Before The Bell-Livestock

Hog Prices Tumble Following Tariff Announcements

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Livestock futures are mixed in a wide range as firm gains are seen moving into nearby live cattle trade. The aggressive losses seen in cattle markets late last week is opening the door for some major short covering now that traders are in the month of April. Hog futures are firmly lower as traders remain concerned about the ability to move pork product overseas. Corn prices are higher in light trade. Stock markets are lower, Dow Jones is 11 points lower, while Nasdaq is down 59 points.

LIVE CATTLE:

Open: 30-to-80 cents higher. Firm buying is slowly stepping back into the live cattle complex. There is growing uncertainty as to just how much buyer activity will develop as the weaker tone seen last week is still expected to have a strong grip. June futures posted limit losses Thursday before the extended weekend break. This may cause some longer-term pressure if buyer support falters during the morning. Cash cattle interest is expected to remain extremely sluggish early in the week. Less activity is likely to be seen Monday than in normal weeks due to several plants gone dark due to Easter weekend celebrations. The lower production levels Monday at plants will also impact the speed at which inventory taking is done. In addition, with a new month and quarter on the books, there may be some shifts on priorities for many buyers. Bids and asking prices are likely to be seen over the next few days, but may not become active until midweek or later. Open interest Thursday fell 493 positions (356,828). Spot month April contracts lost 2,377 positions (38,039) and June contracts gained 59 positions (159,626). DTN projected slaughter for Monday is 106,000 head.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

FEEDER CATTLE:

Open: Mixed. Following limit losses late last week, feeder cattle futures are trading mixed in a wide range. Protective short covering is seen in deferred contract, while sellers were eager to re-enter the market in nearby contracts. Prices range from 90 cents lower to $1.15 per cwt higher as traders try to assess longer-term market direction. Feeder cattle futures have access to expanded trading limits Monday due to how markets closed Thursday, which is expected to create additional volatility through the day. Cash index for 3/28 is listed at $136.21 down 0.02. Open interest Thursday added 1,684 positions (55,941).

LEAN HOGS:

Open: $1-to-$2 Lower. Lean hog futures have posted moderate to strong price pressure early Monday morning following the announcement by China that pork products will be subject to an additional 25% tariff today (Monday). This news is not new, but before this past weekend there was not much certainty as to what products would be impacted and what the timeline would be. There remains a lot of uncertainty as to how this will impact that pork market long-term, as much of the Chinese pork export market was already expected to evaporate based on the aggressive buildup in pork production that China has been doing over the last couple of years. With this in mind, it is not shocking that soybeans and soybean meal has been left off of the tariff list for now. Given the concerns of moving current pork product, prices are expected to remain under pressure over the near-term. Cash hog trade Monday is expected 50 cents to $1.50 lower. Most bids are $1 per cwt lower. Open interest Thursday lost 2,411 positions (234,184). Spot month April fell 999 in positions (21,522) and June eroded 1,547 positions (97,397). Cash lean index for 3/28 is $59.06, down 0.79. DTN projected slaughter for Monday is expected to be 320,000 head.

Rick Kment can be reached at rick.kment@dtn.com

(SK)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Rick Kment