Live cattle see some pressure with 2-sided trade in the feeder cattle futures as the market is positioning ahead of the Cattle on Feed Report and with the lack of cash news.
Plus, there is some uncertainty in the markets with Israel attacking Iran overnight and a counterattack expected.
However, the cattle market is absorbing that and the HPAI news pretty well according to Scott Varilek, Kooima Kooima Varilek. “Nerves have been very high in the cattle market for the last several weeks now but like you illuded to I think we’re starting to fight off a lot of this negative news and finding a spot where we can maybe hold.”
Varilek says the cattle market is not seeing the confidence of the funds yet wanting to get back into the market, but he thinks the true fundamentals are starting to hold the market. The June live cattle have not been able to close above the 100-day moving average either to technically give funds an incentive to buy.
“I think every day we can put the bird flu news behind us is good. We’re finding it’s not upsetting the apple cart in terms of demand. We’re not seeing export bans,” he says.
Varilek says it’s only a matter of time before it’s found in a beef cow, but he hopes that the market will be able to handle it because of the experience we have with HPAI in dairy cattle.
He says there has been very little cash news this week and it may not develop until after the Cattle on Feed Report is released. However, show lists are smaller and Varilek thinks there is a good chance for steady cash.
“I do think packers want to buy some cattle,” he says. However, the packers have had some leverage with the higher carcass weights.
As far as the Cattle on Feed Report the estimates on placements are bullish as they are down 8% from a year ago but Varilek says he thinks it could be bearish compared to expectations.
Hogs are consolidating under the recent highs, but Varilek says the market has corrected its overbought condition and is supported by stronger cash and cutouts. “I think we have a chance for a recovery with stronger fundamentals,” he says.
Grains are seeing some short covering with funds short and traders putting some war premium in before the weekend. Soybeans may also be seeing a technical bounce after hitting new lows for the move Thursday.
Plus, EPA is expected to announce E15 sales for summertime.
