Live and feeder cattle futures are higher to start Friday, with hogs mostly lower. Corn and soybeans are slightly higher, wheat mixed.
Cattle Bounce Friday But is the Bleeding Over?
Live and feeder cattle futures are higher early Friday after making more new lows for the move on Thursday. Scott Varilek of Kooima Kooima Varilek says the market is seeing a short covering or technical bounce after an ugly down week. So is the fund liquidation and bleeding over or is this just a dead cat bounce? He says its too early to tell.
Fundamentals of the Cattle Market Haven’t Changed
The fundamentals of the cattle market haven’t really changed says Varilek but the psychology has. Numbers are still tight and cash prices, while softer, are still historically high. However, the funds who have been long in the cattle market for months saw the writing on the wall with the Trump administration’s plan to lower beef prices and headed for the exit door.
Mexican Border Reopening Fear
The last push to new lows for the move this week came on renewed fears of the Mexican border reopening to feeder cattle imports with USDA Secretary Brooke Rollins once again meeting with Mexican officials to discuss a date for resuming imports and to get an update on New World Screwworm (NWS) efforts. The Secretary once again confirmed there is no solid date set for resuming trade but also mentioned that President Trump is focused on trying to get the border open.
Cash Trade Weaker But Not a Wreck
Cash trade in the fed market has been light this week and at mostly lower money, but Varilek says not a train wreck. The North has traded at mostly $360 dressed which is actually $2 higher than the weighted average last week in Nebraska. However live sale prices have been in the $228 to $230 range. Southern business was $230 to $232, down $4.
Varilek says the cash feeder market has generally cooled off by about $500 per head, although there are still some superior quality strings of calves that are fetching high prices.
Deferred Lean Hogs Make New Lows for the Move
Lean hog futures are once again making new lows for the move to start Friday. Varilek says funds have also liquidated in that market and the cash and cutouts continue to leak lower so that is adding pressure. The December contract is holding steady Friday due to its discount to the Lean Hog Index at $90.60. However, Varilek isn’t sure the market has found its bottom yet seasonally.
Soybeans and Corn Recover
After a round of profit taking on Thursday tsoybean markets are higher, bouncing off support. Varilek says the soybean market also saw a correction as there have been no soybean purchase details like amounts or timing confirmed by China. iSo until the market sees some actual sales or gets some positive news out of the November WASDE, he says soybeans may have a difficult time trading above this week’s highs.
Corn futures have been following soybeans and Varilek says are still in about a ten cent trading range, which he doesn’t expect to change without a major bullish or bearish infusion of news.
