Cattle are higher early with hogs and grains lower.
Live and feeder cattle futures are seeing a recovery rally with the stock market but how much of a rebound is expected?
Scott Varilek, Kooima Kooima Varilek, says demand is still holding together so it may be a function of the cash market.
So far this week there has been some light trade in the North at $193 as well as $305 with grid premiums.
The break in the live cattle futures left an even wider discount to the cash which should be supportive.
Varilek says the open interest went down over 40,000 contracts as a result of fund long liquidation, so at least there wasn’t any new selling.
Yet, there was significant damage done to the charts, especially the feeder cattle with new lows scored in deferred contracts.
“If you lay a cattle chart over a S and P chart they look very similar,” he points out.
However, October live cattle held support around $172 which was the old long term high from 2014 he adds.
Lean hog futures continue to chop and are back lower Wednesday with a nearly $2 drop in pork cutouts and the Lean Hog Index was also softer by 26 cents at $93.33.
So August is at a slight premium going into next week’s contract expiration.
Corn and soybeans continue to see selling pressure with new lows in September soybeans and November also tested the lows but at least they held.
Traders are pressing the market on higher yield expectations in the upcoming WASDE with pre-report estimates showing higher yield and production.
Plus, there have been continued rumors in the market of new crop soybean export purchases from China but there were no flash sales reported again this morning which was disappointing to the trade.
