Cattle and hog futures are higher early Friday, with grains quietly mixed.
Cattle Futures Soar With Sharply Higher Cash
Live and feeder cattle futures were higher Thursday and are seeing continued buying Friday morning pushed by sharply higher cash trade in the North. Scott Varilek with Kooima Kooima Varilek says Thursday saw the volume of live sale prices at $220, up $10 from last week but even some $222 developed in Iowa. Dressed deals had a range of $340 to $345, $11 to $16 higher than the prior week’s weighted averages, The South remained at a standstill.
“So that felt great. We’ve got guys cleaning up a lot of cattle at $220. And then after the close, we were yesterday, we were even able to get some $222 sales that happened. And it had a good feeling because you had some regionals. You had some majors out there. But when you have those certain two majors pushing up here in the North, you can get a lot of traction. So Cash news, lead story feels good. That’s what’s really pushing us higher here,” he says.
Cash Feeders Lead with Record Prices
Varilek says the cash feeder market helped lead the higher fed cash trade with some record prices paid at livestock auction barns including Bassett, Neb. “I mean, that was thefirst sign, okay, a lot of big corporates got out in the yards and you’re thinking, okay, we’re moving higher fast, starting to hear some prices that are dropping my jaw again. And that just continued through the week with cash feeders just going higher, moving higher. And, yeah, Bassett sets the record for the highest price, six weights ever sold going over the $5 mark.” He says its a testament to how tight supply is. And we have heard a lot about fear
He says breakevens are from $240 to $260 which makes him a bit nervous, especially with the heavy weights but he says producers are able to make some money and they are anxious to refill yards. “And feeders are the leaders. That’s the story that got us to these record highs in the first place. And that’s what’s leading us back again.”
The headline of another case of New World Screwworm 120 miles from the Mexican border also helped to support the rally although Varilek says its not producing the limit up moves like it was before. However, the ideas is that most of the bearish news has already been factored into the market.
How High Can Prices Go?
Live and feeder cattle futures have had a great week and have moved past the 38% retracement levels but are now eyeing 50% retracements and key moving averages as resistance areas that need to be taken out to keep the rally going. Plus, will the market go up and fill the chart gap areas that were left when the market tumbled? “Yeah, those gaps, that bloody trail that we left. I mean, those were feeling like they are a long ways away. And now suddenly we’re getting in range here. So we’re looking at a, you know, just over $230 for a Feb gap that one of the gaps that it has there. Is it guaranteed to go fill them? Yeah, absolutely not. You never know. But I think the more confidence we get and we keep grinding us higher, those are now possible to do just that,” Varilek adds.
Where Are Packer Margins?
Varilek says feeders have regained their leverage in the cash market which is the good news but with $220 cash trade what does that do to packer margins? Packers had been running back in the black with the correction in the cash market recently. Varilek says, “That’s good question. I think we’re going to have to kind of dial that in because we had retailers making money. We had packers making money. We had producers making money. It felt really good that all sectors were doing okay at this level. I mean, all we heard about in the last couple months was beef’s too high and need to get beef down. That’s frustrating for us beef producers, you know, look at the price of everything else,” he says.
Hogs Rally in Bottoming Action
Lean hog futures have been higher this week on short covering and with spillover from the rally in cattle. The lean hog index has also been moving back higher which is supportive and that may be providing proof of a seasonal low. Varilek says there are some other factors at work too. “I think actually hogs themselves have, you know, a decent story. I mean, we had its grinding downtrend. We finally were able to stop that train lower. and now in and when you start throwing the disease into the hog market, that that’s a friendly story. So I think that’s probably one of my major factors is,” he says. yep, we
Corn and Soybeans Sideways Even With China Business
Corn and soybeans are quietly mixed on Friday as both margins are range bound. Soybeans seem to be fading the 17 million bu. flash sale of soybeans to China but that is because its been talked about all week and the market is still disappointed with Secretary Bessent’s comments about the 12 MMT buys being done through the end of February, not December. “I feel like when I want to talk about the grains, I’m just kind of rehashing the same stories that we’ve talked about. So just trying to look past. What story is there that’s going to break it out of a top side or a bottom side? And I feel like we’ve got firm floors in for the year. We’ve kind of got through that. So the hopes is for upside. We’re getting some of this, you know, China business. We’re seeing it show up that the market had to do that. We know we’ve got a tight
Right now, rains maybe just a little bit disappointing down there. We know it’s always going to be too dry somewhere or too wet somewhere. There’s going to be a problem and it’s going to make the market news. So that’s what it’s going to take to try to break anything out of the top side.”
However, he admits the South American weather story won’t get real market attention until January. “Yeah, it’s too early but in a market that this boring, We’re looking for something.”
