Cattle, corn and soybeans were seeing pressure to start Friday with hogs higher, wheat mixed.
Cattle See Profit Taking
Cattle futures were lower to start Friday after a strong technical close Thursday where live and feeder cattle made new highs for the move.
Scott Varilek with Kooima Kooima Varilek says the futures are seeing some profit taking.
“So we had a good day yesterday. Open interest has been up the last couple of days on this up and finding ourselves where we’re almost overbought in cattle, so seeing a Friday sell-off here. I thought maybe it would actually happen yesterday. It didn’t. Things traded pretty good.”
However he says cattle futures ran into chart resistance and on live cattle the market tested the long term trend line.
“The long term trend line with that front month continuation live cattle chart, that old line that we’ve had back from 2020, from those lows, been able to drop. We just bumped our head on that on October and that’s where we failed. So technically, that’s a spot for me. I’ve got to watch pretty close. And then, you know, even where the Dec futures are, when they come online, they’re not above it
either. So it does have that long term hiccup for me just technically there,” he explains.
Feeder Charts Confirm a Low
Feeder charts look much better as the futures broke out of a bull flag and have confirmed a low. The November contract got above the 100-day moving average which has attracted some fund buying and open interest has been growing according to Varilek.
“They’ve held their long-term uptrend line which is quite a ways lower than where we’re at yet. And they’re messy. They’re not crystal clear on these trend lines. I wish they were cleaner, but they’re not. But yeah, up front, we broke through and felt really good,” he adds.
Boxed Beef Slammed
The other drag on the futures is wholesale beef prices were down $6.00 on the Choice cutouts and $7.70 on Select on Thursdays close as the market is responding to the ramp up in slaughter pace this week.
Slaughter was down 45,000 head last week due to ICE raid disruptions and that popped boxed beef prices higher. However, prices are falling as slaughter has returned to normal this week.
Varilek says consumer demand has been strong and ground beef prices have already broke from year ago levels due to the influx of imported grinding meat.
Cull Cow Prices Implode
He explains the choice select spread is at nearly $24 which is unusual for this time of year and it isn’t a function of poor demand as much as less interest for grinding meat.
“Our cow slaughter prices are really dropping all of a sudden. We were getting near fed cattle price for fed cows for quite a period of time, and now big discount.”
Prices have dropped as low as $1.40 as packers have regained leverage, especially after key slaughter plants have closed in 2026.
“So we’re in that process of them shifting to where they have control trying to get this industry more towards vertical integration. We lose three plants up here in cash negotiated country what does that tell you? You know the best yielding plant in the world at Joslin and that’s the one they’re going to close.”
He says the packers are trying to make northern cattle feeders squirm to try to get more formula deals like in the south.
There is also a long term shift due to more beef on dairy.
Cash Steady
Cash bids were raised on Thursday in the south with talk of $228 possibly being paid in Texas, which popped futures higher.
However, Varilek says the highest he has heard is $226 which is steady with last week.
The north has been sloppy due to big show lists and cattle that are backed up.
“We’re all making cattle so big and we know eventually we’re going to get slapped on the hand for that and we’ve been getting paid to do it the last couple of years. We will keep doing it as long as grains stay low. So now we’re seasonally into more numbers our show lists are up and we’re having a little bit tougher time trying to sell it,” he says.
Dressed sales in the north have been steady to weak at mostly $345 from a major for higher yielding cattle and $350 from a regional where they don’t yield that good. Live sales have ranged from mostly $218 up to a few at $221.
China Finally Buying?
China was finally back in buying beef on the weekly export sales report at 1100 metric tons.
In the meantime, Brazil hit their TRQ in China with tariffs of 55% kicking in.
So is the U.S. going to pick up some business as a result of that and China lowering the reciprocal tariffs by 10%?
Varilek is skeptical, “For me, that’s always such an uphill battle on China and trying to rely on that. Maybe some short term sales but
I don’t know that it is something we can rely on long term. I mean, when we get more numbers, there’s a mountain of business we could have there. I’m just not believing that it’s going to happen right now with beef prices at these levels.”
Hogs See Short Covering Bounce
Lean hog futures were higher early Friday after hitting contract lows again on Thursday.
Varilek says the market is over sold and seeing some short covering heading into the weekend. Otherwise the cash and cutouts have failed to firm up with ample supplies and support futures prices.
“We’ve had some negative margins on these guys that have hogs on feed, but now you’re able to kind of refill and, you know, whether it’s squeezing a few extra in or finding a contract with a supplier that you really like, you’re finally a little bit in the driver’s seat and trying to find supply. So, I mean, we’ve kind of got that ironed out,” he explains.
However, demand remains and issues and continues to struggle despite beef being at record highs.
Corn, Soybeans See More Pressure
Corn and soybeans were lower again on fund liquidation.
Corn has yet to digest the 2.0 billion bu. quarterly stocks shock from USDA. Plus, heading into the October WASDE private estimates are being released. StoneX pegged corn yield at 182.1 bu. per acre, down .8 bu. from last month. However, they raised soybean yield to 54.1 bu.
Varilek says while harvest has been delayed in the western Corn Belt the extended forecasts are looking drier and other areas are making progress, so there is some hedge pressure.
Add on top of that lower crude oil markets with Europe saying they will pull some crude oil and diesel out of reserves.
