Grain and livestock futures are mostly higher to start Friday, except live cattle.
Scott Varilek says the live cattle market has run into resistance and is seeing some light profit taking.
However, live cattle futures have continued to see late day buying and have been grinding out new highs for the move as funds defend their longs and open interest rises.
The market has received some help from steady to $1 higher cash trade.
Most of the cash has been at $187 which is steady in the North and $1 higher in the South.
However, he says cash has been leading and now the basis is a negative $2 which is very unusual.
Packers have managed to slow kills enough to prop up wholesale beef and Choice boxes are around $310 which is also supportive he says.
However, cattle are getting into stiff chart resistance that the live cattle futures need to take out to keep moving higher and for funds to defend their long positions.
“I am watching $189.47 on the December live cattle contract and above that the psychological $190 area on the board,” he explains.
Lean hog futures are also grinding higher on technical buying following cattle but also slightly lower supplies than expected compared to USDA report data.
Varilek says grains continue to add war and weather premium and that shouldn’t change unless the WASDE is extremely bearish.
