Traders looking at a side of pork

Live Cattle Fundamental Support

The United States failed to win its appeal with the WTO trade court. Our appeal the previous November WTO finding was rejected.

Canada and Mexico have immediately petitioned the WTO for approval to enact trade sanctions against the United States. Either the United States quickly removes the COOL legislation or we will be facing some export taxes.

In the latest month available, March, we exported 185 million lbs. of beef. Of that amount, Mexico took 27 while Canada took 24. This means that 27% of our March exports are now potentially facing a higher tariff.

While the WTO news took the trade’s attention today, we can’t say that bulls are completely done with here. On the intraday charts today’s trade left a moderate gap that needs to be filled at higher prices (Friday’s settlement of 152.52). Friday’s cash cattle trading occurred at $161, only slightly off the $161/$162 trades the previous week.

On the bearish side we have the normal increase in supplies into June. Today’s showlist increased by another 15,000 head across the Plains. Higher numbers in the North were noted as Nebraska feedlots held out last week. Also, cattle bought this week will be filling next week’s smaller holiday-related kill.

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About the Author

Rich Nelson is Director of Research at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA.