Grains are softer early Friday, with cattle and hogs mostly higher.
Cattle Still Holding Uptrends
Scott Varilek with Kooima Kooima Varilek says it has been another volatile week in the cattle futures but despite all that they are still trading sideways and holding the uptrend lines.
He says December live cattle futures would need to take out support at $230 to change that, while feeders are above the uptrend line by over $10.
Lower Cash and Boxed Beef Limit Rallies
Despite continued tight supplies the futures rallies seem to be limited by lower cash and cutouts.
Choice boxed beef was down another $5.25 on Thursday’s close at $363.22 and has now broke $57 off the highs just a few weeks ago.
Varilek says there was a little consumer push back finally at the higher price levels but he thinks demand is still solid.
Cash trade has been lower again this week in the North at mostly $230 live, down from last week. The South has been quiet so far.
Cash Feeders Shining Star
Cash feeders have continued to be strong in the sale barns due to the tight supplies and that is still helping to hold the market together.
Varilek says, “Remember feeders have been the leaders on this rally.”
NWS Rumors Continue
The one thing that could break the feeder market is the reopening of the Mexican border to feeder imports or a New World Screwworm (NWS) case in the U.S.
So Varilek says that has the market nervous and watching every post about the status of the parasite.
The FDA has conditionally approved Dectomax-CA1 injectable solution for the prevention and treatment of New World screwworm larval infestations, and prevention of NWS for 21 days.
Lean Hogs Confirming a Top?
Lean hog futures are trying to recover on Friday after five week lows in the December contract yesterday.
The market has been seeing profit taking most of the week despite the bullish news in the Hogs and Pigs Report.
So Varilek says that may be an indication the top is in and funds may continue to liquidate but they are watching disease status for any changes.
Grains Pause Hitting Resistance, Seeing Harvest Pressure
Grains futures are pausing on Friday morning as corn and soybeans have had a nice recovery off of this weeks lows.
The fund buying and short covering was tied to President Trump’s social media post about talking to China about buying beans at the end of the month.
However, corn is running into chart resistance around $4.25 on the December contract which intersects with the 20-day moving avergae and November soybeans could not take out $10.25 resistance right below the 50-day moving average.
There is also some farmer selling and hedge pressure heading into the weekend.
