Cattle, hogs and soybeans were all higher early Monday with corn and wheat steady to lower.
Cattle Futures Hit More Record Highs
Cattle futures hit all-time highs again Monday morning in all the feeder cattle contracts and all but the October live cattle contract.
Brad Kooima of Kooima Kooima Varilek says November feeder cattle futures were up over $20 last week and have led the rally on strong cash, tight supplies and the continued cases of New World Screwworm (NWS) in Mexico keeping the border shut.
Cash Feeders the Leaders
The feeder cattle market has been leading the unprecedented rally, specifically the cash feeder market according to Kooima.
Although he says the futures went premium to the feeder cattle cash index on Friday.
“So we flipped. We went from futures being six under the index to being like seven dollars or so over the index. So the feeder cattle futures really grabbed a hold of that last week and then put a big premium in it,” he says.
New World Screwworm Case Also Fueling Rally
Kooima says another case of New World Screwworm (NWS) in Mexico reported last week 170 miles from the U.S. border also fueled the rally but he says at some point that will be old news.
“Well, they’ve got protocol to treat it, they cure it, they solve it, it’s gone. And I don’t know, at some point, I gotta think that this another reported case of screwworm in Mexico is gonna lose some of its, I don’t know, lose some of its excitement,” he says.
Kooima adds that the border is closed and will likely stay closed until it gets cold.
“So I don’t know, I’m kind of tired of that whole story.”
Fed Cash Cattle Trade Higher
Fed cash cattle trade was nearly non-existent in the South last week according to Kooima but in the North there were some cattle that moved at mostly $235 live, up $5 from the previous week.
This also has helped to fuel the rally in the live cattle futures.
What Tops the Cattle Market?
So are cattle like gold which has climbed over the record $4000 mark? Or what finally breaks the market?
Kooima says:
1. The reopening of the border to Mexican feeder cattle imports.
2. Economic concerns
3. Brazil beef imports resume.
“Cattle have a tendency to make V bottoms and V tops and in other words, go straight down and then just turn and straight up then crash. It doesn’t feel like today, of course, but I do think when the border does open that that’s gonna be a problem for feeder cattle. The thing that I probably wonder a little bit more about in the short term, you know, I know Trump has walked this deal back, has come into about China a little bit already, but this is a real situation still.
He thinks without some resolution to the China trade situation that could cause an economic slowdown which could trigger fund liquidation in the cattle.
“The other thing I thought I thought maybe you know, maybe this talk with Brazil that you know If you want to lower the price of hamburger, you could back off on this tariff that he’s got I there are some of people me included that think that that’s what will happen next,” he adds.
Lean Hog Futures Recover
Lean hog futures are oversold and Kooima says they are trying to recover on Monday.
The news that President Trump has backed off the threat of an additional 100% tariff rate on China is allowing lean hogs and many other markets rebound.
President Trump’s administration on Sunday signaled openness to a deal with China to quell fresh trade tensions while warning that recent export controls announced by Beijing last week are a major barrier to talks. Trump wrote on social media Sunday: “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”
Trump on Friday announced an additional 100% tariff on China as well as export controls on “any and all critical software” beginning Nov. 1, hours after threatening to cancel an upcoming meeting with Chinese leader Xi Jinping.
Soybeans Also Recover as China Trade Tensions Ease
Soybeans were down 15 cents on Friday on the news the China trade meeting at the end of the month between President Trump and President Xi was canceled but are trying to recover on Monday with tensions easing.
However, China has still not bought any soybeans from the U.S. and so the export picture has not improved and the U.S. is running out of time to get soybean sales for this marketing year.
Corn Sees Harvest Pressure
Corn futures were also down on Friday with soybeans and are trying to recover as well Monday but have been held back by the lower wheat market and harvest pressure.
