Livestock and grain futures are mixed early Monday.
Can Cattle Hold?
Cattle futures started mostly higher Monday after holding slightly higher weekly closes in all but October live cattle last week.
Brad Kooima, Kooima Kooima Varilek, says the market is staying intact and absorbing a great deal of bearish news including last week’s lower fed cash trade and lower cutouts.
The funds are still long in the market but if December live cattle take out $232 on the charts that will trigger some liquidation and if $230 is breached that could turn the trend lower which could cause mass technical selling.
Cash is King
He says cash trade on feeder cattle at the auction barns has continued to be strong which is bullish.
However, fed cash trade last week was once again lower in the North at $228 to mostly $230 live and the North has lost its premium to the South, which Kooima says is bearish. The South also traded $233, down $3 last week.
Yet, he is still optimistic about cash trading steady in both areas this week.
Boxed Beef Still Leaking
That’s despite boxed beef values seeing pressure again last week with the Choice cutouts down $9.16 and closing in on $60 off the highs a few weeks ago.
Kooima says seasonally the beef market could continue to see some pressure.
NWS Rumors Continue to Circulate
Kooima says the market is also nervous about the timing of the opening of the border to Mexican feeder cattle imports.
“There seems to be a new rumor circulating every week,” he says, which is also keeping speculators cautious.
Cargill Plant Dark
Meanwhile, the Cargill plant in Ft. Morgan, Colorado is dark today and for the next 10 days due to routine maintenance.
Kooima says the market knew about that two weeks ago and it shouldn’t have an impact on the market as they are going to slaughter cattle at other facilities.
Lean Hog Futures See Technical Damage
Lean hog futures had a lower weekly close last week and have done significant chart damage and so Kooima thinks there could be more fund liquidation ahead.
Cash and cutout values were also down last week.
Grains Quiet, But Holding on China Hopes
Grains were quietly mixed early Monday but Kooima says funds piled back into the market last week after President Trump’s social media post indicating a deal was near.
He says that may just be enough to keep the traders in the grain market for the immediate future.
