Cattle futures are sharply lower with hogs mixed, grains all sharply higher.
Cattle Futures Crash, Feeders Limit Down on Fears of Brazil Tariffs Easing
Live cattle futures are sharply lower with feeder cattle hitting limit down the expanded limits of $13.75 in early trading.
Brad Kooima of Kooima Kooima Varilek says Friday many of the live and feeder cattle futures contracts ended limit down on fear of the southern border reopening to Mexican feeder cattle imports as Mexico’s Ag Minister has a meeting scheduled this week with USDA Secretary Brooke Rollins to try to resume trade.
However, Kooima says there was another reported case of New World Screwworm (NWS) in Nuevo Leon over the weekend which is 70 miles from the U.S. border which failed to support the feeder cattle futures.
So, he says the market is now focused its attention on weekend comments from the Trump Administration that a meeting was schedule with Brazil’s president to talk about easing tariffs, which would include the 50% additional levies on beef imports.
“They seem to act like it’s all but a done deal that we’re going to see the president sign a rollback of the tariffs. I don’t know if it’s the 50 % or if it’s more than that, but the extra was, of course, the 50% that put them at 86%. And, you know, that seems to be part of the story,” Kooima explains.
Higher corn prices are also adding to the pressure in the feeder cattle futures.
Fear and Chart Damage Have Funds Liquidating
Kooima says funds are liquidating their long positions and as a result have taken out key long term support areas leaving technical damage on the charts.
December live cattle took out long term support at $229, near the 100 day moving average. “I think, you know, today’s low is very close to 38% retracement of the whole move up from the April low to the high we just made a couple weeks ago. To me, the next level then would be this basically $219 level, which is halfway back of the whole leg up.”
The next support area that needs to hold in November feeder cattle futures is $335 he warns. “Feeder cattle have changed what, nearly $40 a hundred. Yeah, we were at $380 a drop to $334, more than $40. And it didn’t take us long.” he adds.
Cash Cattle Trade Still Holding
The cash trade is still holding up on feeder cattle and the cash index is calculated at $367.45, up $.47, leaving the nearby futures at a nearly $19 discount.
Meanwhile, fed cash trade last week was only slightly lower in the North at $370 dressed, down $2 and $238 to $240 live. Southern business developed at mostly $238, down $2.
Hogs Fail to Rally on China News
The lean hog futures opened just slightly higher after news of a possible deal with China but quickly sold off with spillover from the lower cattle futures.
Kooima says, “There used to be a day when just the whisper of China business would send lean hog futures limit up, so clearly China is not a big factor anymore for the market,” he explains.
Grains Rally on Possible China Deal
Grains were higher early with a gap higher opening in soybeans on news of a positive meeting between the U.S. and China over the weekend.
Secretary Scott Bessent says the ground work has been laid to drop the 100% tariffs on China, a one-year plan on rare earths and importantly substantial agricultural purchases.
However, the amount of soybeans China will buy and when are the big questions says Kooima.
Plus, soybeans, corn and even wheat are into resistance areas on the charts at the summer highs and will need confirmation from Thursday’s meeting between President Trump and Chinese President Xi to take out those levels.
