Live and feeder cattle futures recovering early after a round of profit taking on Monday. Brad Kooima, Kooima Kooima Varilek says the June live cattle had reached the 62% retracement level on the charts and were oversold so the funds took some money off the table. “We did score a reversal, so we have to respect that,” he says. However, the early push higher in the futures is negating that and so the close will be important. He expects the cash market to be strong again this week after three higher weeks as packers are short bought and weights are declining due to the winter weather stressing cattle and now leaving mud in feedlots.
Kooima says the cash market for feeders is also on fire in the country due to the tighter supply indicated in last week’s cattle inventory report. “In fact, there’s 1 million less cattle available to be placed in feedlots and that should keep prices well supported for a while.”
Lean hog futures are seeing pressure and consolidating for the 5th day. The futures premium to the Lean Hog Index is being adjusted and Kooima says there may also be some hedge pressure especially in the back months which are holding a premium.
Grains are mixed with soybeans building on Monday’s reversal, as the market bounced off chart support positioning ahead of the WASDE, despite better rain chances in Argentina.
Meanwhile corn is sliding and consolidating around support of $4.40. However, Kooima says corn has been rangebound between $4.40 and $4.50 and continues to look for direction.
