Cattle futures are mostly higher early Tuesday as well as hogs, while grains are slightly lower
Can Cattle Recover From NWS Selloff?
Live and feeder cattle futures are trying to recover after a selloff of over $4 in live cattle and $8 in feeder cattle on Friday. Brad Kooima of Kooima Kooima Varilek says the markets were down sharply on Friday due to an unconfirmed rumor of New World Screwworm (NWS) in the New Mexico. Fear was also tied to comments by Texas Agriculture Commissioner Sid Miller who stated that NWS cases only 215 miles from the Texas border warranted increased monitoring by producers. USDA later confirmed there were no positive cases.
So can the market recover now that there is no confirmed NWS case? Kooima says that would normally be the school of thought. However, with outside markets seeing risk off selling that may temper some of the buying interest in cattle today.
Risk Off Market Place Holding Back Cattle
Over the weekend the U.S. announced a 10% tariff on eight European countries starting on Feb. 1 if the EU did not sell Greenland to the United States. The EU responded with the possibility of retaliatory tariffs on U.S. companies operating in Europe of $93 billion Euros. Kooima says the bigger concern is that this will anger China or spark a possible move by Beijing to take over Taiwan. All of this could upset the U.S. China trade truce which would be negative for the outside and equity markets and that could spill over negatively on the cattle futures.
Cash Cattle Trade Steady Last Week, Key for Direction This Week
Kooima says he thought it was encouraging the selloff in the futures Friday only resulted in tempering the fed cash trade slightly as mostly steady cash trades took place in the North and South. The South traded $233 to $234 live and the North was $365 dressed and mostly $232 live. This week’s cash trade will be key to helping the futures market recover and he is hopeful for slightly higher prices. Although cash trade could be stalled until Friday after the USDA Cattle on Feed Report.
Cattle on Feed Friday
Kooima says the report should remind the trade how tight inventory is. “We aren’t even into the tightest numbers yet,” he reiterated, “And this report should reinforce that with the lighter placements, especially in the South due to the lack of Mexican feeder cattle being placed in feedlots.”
Lean Hog Futures Hitting Contract Highs
Lean hog futures were mostly lower again Tuesday morning making more contract highs in the April through the deferred futures. The market has seen fund buying pushing the rally but its also related to disease problems that are lifting isowean pig prices over $100 and creating another marketing hole for the summer months.
Grains Ease on EU Tariff Fears
After a higher close Friday, the grain markets are easing back with fears about retaliation from the EU or even China plus the risk off selling in outside markets is spillover over. Kooima says even without that negative news the grain markets don’t have much positive to trade on. He says the bigger supplies in the last Monday’s USDA reports is likely to keep a lid on prices, in addition to Brazil’s record soybean crop starting to come to the market.
