White House Sources Indicate a Prelim NAFTA Deal At Hand

by Archer Financial Services | Apr 03, 2018

by Dennis Smith
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In terms of clarity, keep in mind that due to a glut of pork in China, and the fact that pork prices in China are at 4-year lows, the Chinese were not expected to import much, if any pork in the weeks ahead before the tariff announcement. My point is the imposed tariff will not really lower or impact total U.S. pork exports this year. Futures went limit down yesterday most likely in direct response to President Trump, unexpectedly, tying immigration policy and NAFTA together. Bloomberg is reporting today that sources within the White House are stepping up the NAFTA talks and aiming to forge a preliminary deal on NAFTA by the middle of next week. They appear front running the President, with the intent on forging a lasting deal ahead of elections in Mexico in July and U.S. elections in November. Pork prices (U.S.) have been very stable now for six weeks which usually portends a bullish move. Cash hogs are called higher for today. Finally, volume yesterday was 36,500 with open interest up only 520 cars. Not a massive liquidation but a change of ownership. Keep in mind we’re on expanded limits. At some point, perhaps today, the switch will be flipped from bearish to bullish.


The show list is only slightly larger this week compared to last week. Numbers of finished cattle are larger in NE but the same in the south. The weekly kill is projected to come in at 606,500 which is larger than last week’s stifled kill of only 594,000. There were no bids to report from yesterday. Prices dropped into new lows on volume of 72,500 with open interest declining by less than 1,000 cars. The beef was mixed yesterday with choice lower and select higher. Futures are grossly oversold and could bounce and bounce hard any minute. Springtime demand has yet to surface, numbers have yet to increase. As the low end of our final downside target was reached yesterday in the June LC (10200-10500) we continued to edge out of hedges. Look for a recovery to be led by the Oct, Dec and Feb LC contracts.

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