Live cattle are mixed taking a breath and digesting last week’s record cash, but with tight numbers it’s just a matter of time before futures make new highs according to Brad Kooima of Kooima Kooima Varilek.
The five-area weighted average hit a record last week at $190.09 and Kooima thinks the market can exceed that level this week.
“You and I have talked about what the impact of tight supply is and you know I would suggest that we’re not even rally there yet to the real tight supply which it looks to me like the cycle has finally begun. I can get some data-based proof of that and somewhat subjective proof as I ask around whether we’re seeing some retention of heifers, and it sure seems like its starting.”
He says he was impressed with the strength of the Northern cash trade ranging $190 to a few at $193 and $300-$304 dressed, which has exceeded Southern levels at mostly $187, up just a $1.
‘Supply is definitely tightest here in the North where we do most of the negotiation of course. the South I was a bit disappointed in it I thought maybe they would hang a little tougher. They were up a $1 but I really thought they would be up $2 but we’ll take it I guess as we get it,” he says.
Kooima adds, “Are we going to improve on that? I would say yes, we will this week we’ve got a short for a long. You’ve got a packer that I think needs to move some meat because he’s got it sold.”
Live and feeder cattle futures continue to set at a discount to the cash which is supportive in addition to the reinforcement of tight supplies in the Cattle on Feed report with placements down 6% and on feed totals down 1% from a year ago.
“What’s happening is the numbers are moving from the South to the North as well. Placements are down sharply in Texas, Kansas and Colorado for the first four months of the year, down over 10%. Where the placements in the North or what I would call the North which is Nebraska, Iowa, South Dakota and Minnesota are actually up about 4%.”
He also thinks the fed cattle futures will go back and make new highs. “Short answer is yes, I think we’re going to take a run at those. I think we’re going over $200.” However, it may take some time maybe not until late 4th quarter or early first quarter of next year.
Feeder cattle futures also continue to make new highs for the move with the cash trade in the country on fire.
Lean hogs try to bounce and correct their oversold status, but can they hold those gains? So far, they have been down 23 of the last 25 sessions.
Corn and soybeans struggle with planting progress and Kooima says they may continue to without a continued and bigger rally in wheat.
