Cattle are higher early Friday as well as the grain markets, hogs are lower.
Scott Varilek, Kooima Kooima Varilek, says cattle futures are holding together despite lower cash trade in the country late Thursday afternoon, into Friday morning.
There is more business to do but the early sales are ranging in the South from $222 to $225 but the volume is down around $4 to $5 from last week’s weighted averages. Northern sales live have ranged from $230 to $232, with dressed prices from $365 to mostly $368, down $9.
Varilek says the cash market has been down the last two weeks as the packers have started to regain leverage in part due to their aggressive buying for several weeks out, which has decreased the number of negotiated cattle they need to buy.
Slaughter has been light this week at only 105,000 head on Thursday with two plants running slower chain speeds. The JBS facility in Grand Island, Neb., was down to only 1,000-1,500 head slaughter due to flooding issues. The Tyson plant in Amarillo, Texas, has also been down with labor issues and picketing workers. That plant kills nearly 5,200 head daily.
This has propped up boxed beef values again this week with Choice cutouts just shy of $395. However, Varilek says good consumer demand has also been pushing prices to levels that are only exceeded by price levels seen during COVID.
Futures have been holding together due to their discount to the cash market but would have to see a much bigger correction to change the trend according to Varilek.
Lean hog futures saw early pressure on Friday in response to the USDA Hog and Pig Report which showed a slight increase in the herd at 100.4% of a year ago when the trade was looking for a .4% decline. Other categories also showed some expansion including pigs per litter and pigs under 50 lb.
However Varilek says that does not match up with what they are seeing in the country with a smaller pig herd and farrowing rates tied to disease.
As a result he thinks the pullback in the futures will be short lived.
Grains are trying to bounce on Friday after and ugly week which took corn into new contract lows again.
Varilek says the grains are seeing some short covering in response to news the U.S. and China have struck some type of deal on rare earths, but it is also end of month and quarter and the market is gearing up for the USDA Acreage and Quarterly Stocks Reports on Monday.
However, he doesn’t think the bounce will last long with the favorable weather and large crop in the making.
