Cattle and grains are mostly lower early, with hogs higher.
Scott Varilek of Kooima Kooima Varilek says live and feeder cattle futures are seeing more pressure Thursday with the futures looking a bit tired and toppy.
“It’s kind of trading a little bit like a bear market here. These futures are trying to tell us this market has topped and there’s going to be some downside and cash is going to come down and eventually that is going to be right but I don’t feel like its this week or the next week,” he explains.
So, he is still optimistic the futures market can hold the bottom end of the trading range on the charts, due to the significant discount it still holds to the cash trade.
He says the break in live cattle Wednesday came on news of China delisting a Nebraska beef packing plant due to ractopamine.
He says there has also been a lack of cash trade this week which has fueled talk of weaker cash but he’s still expecting steady, maybe even some stronger trade this week or next.
This comes after last week’s $2 advance on cash and with feedlots in the North still holding out for $198.
“I’ve heard of one small deal in Iowa at $196 but that’s not up and down the road trade here yet but packers are sniffing around. We’re getting into that time of summer where there is generally some good Labor Day buying by the packers where they make a little bit of a push the first week or so of August,” he qualifies.
After that he expects cash trade to ease seasonally as beef featuring and demand starts to slow down.
Varilek says locking in profits for cattle feeders has been difficult with the discount the futures is holding to the cash.
“The board isn’t giving us great opportunities to hedge. So, with breakevens close to $196, $198 we need to protect the downside,” he says.
Hogs are higher supported by stronger cash and a 13th day of the Lean Hog Index rising, plus decent weekly exports at 31,500 metric tons.
Corn and soybeans continue to grind out new lows with rains this week in key areas of the Corn Belt and more in the forecast promoting ideas of record yields.
