Cattle were mostly higher early with steady to slightly higher cash last week and the futures discount and tight numbers supportive.
However, cattle started to fade midsession as Brad Kooima of Kooima Kooima Varilek says open interest in the cattle futures have been declining which means there is a lack of confidence in the market due to bird flu headlines.
The early support and buying interest in the futures market was tied to cash, which was steady to $1 higher in the South last week at $184-$185, while the volume of cash was steady in the North at $187 or $$295 dressed. Currently futures are at an unusually large discount to the cash.
He says packers continue to try to slow chain speed with one of the majors being dark on Friday.
Technically, June and August live cattle have slipped back under the 100-day moving average and he would like to see the August contract get and close above the 40-day moving average which is at $175 first to continue to extend the rally and get funds back in the futures from a technical standpoint.
Hogs bounced after a lower week, but futures are at a premium to the Lean Hog Index and cash is weakening and will cap the rallies.
Grains start mixed and then quickly turn higher led by wheat with crop and weather concerns continuing to drive fund short covering?
But funds have exited a big chunk of their short position in corn and soybeans so how much will that limit the upside?
Kooima says he’s concerned that funds may not have much more fire power. Plus, with a more favorable weather window for planting and that the market will take risk premium out as a result.
