After a lower start the ag markets are trying to recover with a bounce in the outside markets.
Brad Kooima, Kooima Kooima Varilek, says cattle and hogs are both under expanded limits this morning after seeing limit down closes on Friday tied to tariff uncertainty, recessionary fears and the implosion in the stock market.
Cattle saw additional pressure Monday morning from fund liquidation tied to the uncertainty of tariffs, recessionary talk and the lower stock market.
However, after a gap lower opening overnight in the financial markets the DOW, S&P and Nasdaq rallied sharply off their lows.
Over the weekend nearly 50 countries reached out to the Trump administration trying to negotiate lower tariffs so that may have helped stabilize the outside markets.
The recovery in the stock market pulled even cattle futures higher.
Kooima says forging a bottom in the cattle was the real key to stopping the bleeding and fund liquidation in that market.
He says key support in June live cattle held at $193 and the contract is also back above resistance at $196.50, which is an encouraging sign.
Supportive features for the cattle market continue to be tight supplies and last week’s steady cash remains at a huge premium to the futures.
Lean hog futures saw a reversal before cattle and Kooima says the belief by traders is that pork is more recession proof, plus Mexico is the top pork export customer and it is not impacted by the tariffs as it is USMCA compliant.
Grain markets are also higher this morning, even soybeans which saw $.33 losses on Friday in reaction to retaliatory tariffs from China.
Weather is supportive to the wheat market with flooding in some of the soft red winter wheat areas and some cold temperatures on Sunday morning in hard red winter wheat areas.
Corn futures are also adding weather premium with some concerns about flooding in the Southeastern Corn Belt and replant possibilities.
Over the last five days Indiana, Ohio and Southern Illinois received 4 to 5 inches of rain, while areas of the Ohio River Valley saw heavy flooding with Kentucky, Arkansas, and areas of Tennessee receiving 10 plus inches.
However, corn is being supported by strong old crop demand and market talk that Vietnam is looking to purchase more U.S. corn as a way to avert tariffs.
Corn and wheat are also building on higher weekly closes as they are less impacted by tariffs again because Mexico is a top customer and was not hit with the reciprocal tariffs.
