Cattle and grains higher early, with hogs falling.
Live and feeder cattle futures gapped higher on the open with USDA/FSIS announcing the outcome of tests for H5N1 in ground beef.
USDA tested 30 samples of ground beef at retail outlets, and announced late Wednesday all the tests came back negative, which rallied the market according to Scott Varilek, Kooima Kooima Varilek.
He says the market sold off earlier in the week when USDA announced it would be testing due to the uncertainty it created.
Then yesterday there was a rumor of another announcement from USDA. “No one knew what the announcement was but assumed the agency had found the virus in beef. So, the market was scared and sold off,” he says.
So, cattle opened higher with some triple digit gains. He says, “These tests are what has been holding the market down. That’s been the question, is it going to be in the beef or not? The story feels good right now but maybe it’s not over yet. You know grabbing 30 samples of beef from a store. I don’t even know what country that’s from. That’s hard for me to say that that’s how we’re testing them. You know we import so much beef that gets ground up for ground beef that it could have been Australian for all I know.”
He says cash cattle trade and bids were moving higher prior to the negative test announcement. On Wednesday there was some $185 to $187 live cash trade in the North as well as $292 up to $296 dressed cash late in the day. The volume was $295-$296 up $1-$2 from last week’s weighed average in Nebraska.
“Earlier in the week there were two days before we knew this negative USDA test that we traded $187 kind of under the radar. A few regionals sneaking in there and grabbing some cattle at $187 and there was some $187 traded yesterday, those cattle go today,” he adds.
Cattle supplies are tight in the North and its being reflected in producers holding out for higher money.
Plus, we saw a marketing year high for beef exports this morning, at 22,500 metric tons, in the weekly report from USDA.
Hogs set back after taking out chart support Wednesday and with the futures at a premium to the cash index.
Grains rally on planting delays in the U.S. and harvest problems in South America.
There has been heavy rains and flooding in Rio Grande do Sul and Santa Catarina, Brazil and far northeastern Argentina and extreme southwestern Paraguay. Plus, there is more rain the extended forecast which is slowing harvest and causing quality concerns.
Is a technical breakout in the making? Varilek says that’s a possibility with the funds so short in the market and he says a close in July corn over $4.60 could be the catalyst.
However, he is using those pops to market some grain.
