Grain and hog futures were higher early Monday, with cattle lower.
Cattle Fall on Technical Selling
Cattle futures were lower on Monday after posting lower weekly closes last week and with contracts hitting resistance on the charts.
Last week the market technically looked promising says Joe Kooima of Kooima Kooima Varilek.
The feeders put in an inverted head and shoulders bottom and the live cattle put in the last leg of the ABC correction lower on the charts.
The technical buying came despite shaky fundamentals and buying took place on the dips.
“Then Friday it just the air was let out of the balloon unfortunately. So a nasty look on the on the charts and you are seeing hangover today,” he says.
Fundamentals Shaky
Kooima says the fundamentals are weighing on the market with boxed values taking hit late in the week. The choice cutouts dropped nearly $9 on Thursday and Friday as a result of the slaughter pace ramping back up.
For the week cattle slaughter was at 548,000 head which was up 64,000 from the previous week as packers were making up for the lost kill the previous week tied to ICE raid disruptions.
“It shouldn’t be a huge surprise that you’re going to see a little weakness in the boxes because of that and you know two weeks ago when we had that lighter kill we expected maybe a little bit more bounce there in the boxes because of that we didn’t see it. So it’s kind of it’s leveling off,” he explains.
Kooima attributes that to the increase in imported beef coming into the U.S.
“You’ve got a $20 difference between choice and and select. All of that beef coming in from South America makes it hard to figutre out what demand really look like,” he says.
Cull cow prices have dropped down to $140 as a result compared to $200 a month ago.
Where Will Cash Trade This Week?
The cash market is two-tiered right now according to Kooima.
Fed cash trade was steady in the south at $226 live with some tighter supplies. However, the north was mostly $218 to $220 and $345 to $350 dressed he says.
“If you could find some cattle from the north that could go to the south, you might have got a little bit better deal. It’s just a situation that we have enough numbers up here, our show lists are bigger right now. The south is tight that’s why they got $226 what is that the third week in a row?” he adds.
Most of the packers were bidding last week, which is encouraging but it’s too early to tell if that’s going to be a boost in the marketplace or not.
“It’s such a hodgepodge up here that it’s very difficult to get a clear direction, even on this week’s cash, because I’m just afraid that we have too many that we carried over from last week that we couldn’t get a bid for at all on Friday,” he adds.
He is also hopeful the weather will help dry up the feedlots so feeders don’t have to battle all the mud.
Lean Hogs Bottoming?
Lean hog futures were higher on Monday with follow through buying after December and some of the deferred contracts scored key weekly reversals. So, has the market finally bottomed?
The funds are near record short by 44,000 contracts, so some of it was short covering as the market is oversold.
Still, he says hogs are tough to trade, “It’s tough to follow them cash wise and the momentum there because it’s too vertically integrated. Once the hog charts start looking really good and gets momentum boom the chart just flips over.”
Fundamentally he says the market has not seen much improvement in either the cash or the cutout values, which were trading at multi-year lows.
Plus, with the cheap isowean prices it sets up potentially a bigger supply six months to nine months down the road.
He chalks some of the action up to cattle/hog spread unwinding.
“I actually call it kind of a disconnect between the two. So it’s hard for me to really find a price correlation that they have to be. Whether it’s four and a half times greater, what the value is, nobody knows. That’s why I call it a disconnect between the two.”
Still, Kooima is hopeful the funds will respect the technical reversal. “If you start making these charts look a little bit better, especially those long-term ones, like you mentioned with the weekly ones, these funds, they’ll respect it.”
Grains Bounce Off Support
Grain futures were higher early Monday after losing 30 cents in corn last week, 40 cents in soybeans and 15 to 25 cents in wheat.
Kooima says the markets are oversold after big fund liquidation and selling last week and due for a correction. The combination of China disappointment and USDA’s larger quarterly corn stocks estimate by 173 million bu. verses ending stocks smashed the market.
However, the futures also held some key support areas.
“Technically this Dec corn the last few days we’ve held $4.95 okay so triple bottom support, but if you look a little bit deeper on the charts back to the month of July we had a Dec corn high got up to $4.92 then we failed and then we punched through it eventually. So, to me this $4.92 area is more effective. It’s a retracement level as well,’ he adds.
Nov soybeans have been holding the $12.72 area which is a high from back in July that represented a break out area. Winter wheat futures have held their 100-day moving averages and are working on key daily reversals.
End User Buying
He also points to end user buying surfacing at these lower prices.
Flash sales of 5.1 million bu. of corn to Mexico for 2026/27 and 3.8 million bu. of soybeans to unknown destinations for this market year are proof.
War Premium
The market was also adding some war premium as fighting escalated in the Black Sea. This time Russia hit Ukraine’s key export port of Odessa which garnered attention from the trade as it will further disrupt exports.
“Through that port, that’s where not just Ukraine grain is moved but Eastern Europe. It all has to flow through there. So it’s just a big disruption there. It’s maybe something a little bit different on the headline compared to just, you know, the drone strikes going on.”
