Live Cattle:

This morning's economic data set the tone for a lower trade in most markets and cattle futures responded to the defensive price action.  A lower GDP print showed that the US economy contracted in the first quarter by .3% vs an increase in Q4 2024 of 2.4%.  The US economy is slowing.   Less spending power, higher fixed costs and leveraged US consumer are all contributing to recession fears that if materialized, will work its way into discretionary spending habits.  Chris Swift is on vacation for a few days but noticed that evidence of a pullback is starting to show up in normal life on the Gulf Coast.  He stated that separation is occurring between one side able to maintain current lifestyle while the other is experiencing trouble keeping up.  Inflation is no doubt the culprit as insurance premiums, groceries, rents and everything else that is digging into the pockets of consumers go up while wages stay the same.  Those most feeling the effects of this are those who make less wages.  Even if we make these trade deals in the coming months, the effects of them are sticky.  I heard that Temu is charging for shipping now that used to be free.  This charge was added to offset tariffs and I doubt will go away if a deal is made.  I live in South Florida and we still see the effects of surcharges that started with Covid and are still lingering.   We are also seeing a pullback in real estate where Covid transplants are going back to wherever they moved from often because cost of living here is high.  Real estate doubled here in 5 years on loose monetary policy and is now pulling back significantly.  I live in a beach town and we are seeing a pullback of restaurant foot traffic.  What does this have to do with the cattle market?  Maybe these observations that Swift and I have made lately are early indications that a recession may actually materialize.  If that is the case, I have a tough time forming an argument that cattle and boxes can stay at record levels for much longer.  June cattle closed down almost $2 with a $7.28 discount to April, which expired today.  This was after 220 cash traded during today's session.  The coming sessions will give us more clarity if this is a healthy and much needed correction or something bigger.  Either way, I think it warrants looking at risk management tools available to producers.  PM Boxes today were down 2.49 today at 345.77. 

Feeder Cattle:

Feeders were down today and seemingly following price action in the equities market, both making intra-day lows around 10 am CST.  We often see this correlation on big movement days.  If you are watching prices every day and wondering where to make marketing decisions on unhedged inventory, pay attention to lower price action on bullish news.   Still nothing proven yet but warrants taking a look at.  The basis situation is better in feeders than in fats out to August and makes sense given recent rains in grazing areas and demand for replacement inventory.  I encourage readers to consider taking advantage of it.  

Energy:

The energy market were volatile today and crude dropped $2 on news that the Saudi's said they were ok with low energy prices, indicating that they will not support output quota restrictions in the upcoming OPEC meeting.  Lower prices being offset by higher output.  US gasoline demand is strong and geopolitical risk is still high.  I would be surprised if we stay in the 50's for long.  

Corn:

Corn rebounded today after yesterday's selloff which was attributed to favorable US planting pace and Brazil rains.  A low us dollar has contributed to a healthy corn export pace and 2 flash sales in 2 days gave buyers some conviction to buy yesterday's dip.  Tomorrow's export announcement will set the tone for the day session and give some color as to how much China doesn't need to import US grain.  

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