Cattle trading higher early Monday, hogs mixed, grains see heavy selling pressure after gap lower openings on Sunday night.
Cattle Futures Rebound With Better Than Expected Cash
Brad Kooima, Kooima Kooima Varilek, says cattle futures ended higher last week and are showing resilience with a recovery early Monday after a lower start.
He says the driver is better than expected cash trade last week with the North ranging from $230 to $235. Mostly of the volume was at $233-$234, but there was even some $235 traded on Thursday. Dressed prices were mostly $368 to $370, steady to $2 lower than the prior week’s weighted averages. The South was mostly $225, after starting at $222-$224, steady to $2 lower.
Kooima is optimistic about cash trading steady to higher this week as the feedlots are starting to regain leverage due to tight supplies.
Futures continue to hold a discount to the cash trade and that is also keeping the funds defending their long positions in the cattle market.
Today marks the first Southern port to reopen in Arizona to Mexican cattle imports but its yet to be seen how many cattle are going to cross the border. Kooima isn’t expecting a flood of cattle due to the strict protocol.
Boxed beef cutouts have started to slide with Choice down $5.11 on Thursday’s close but that is the normal seasonal after the big July 4 holiday demand push.
Lean Hogs Continue to Consolidate Under Recent Highs
Lean hog futures started lower after a lower week last week and then turn mixed.
The market is disappointed there was no China trade deal announced by President Trump on Thursday while in Iowa and cash and cutouts are also sliding and so Kooima thinks the top is in the market.
The funds held a record long in last week’s CFTC Commitment of Traders report and so futures may continue to fall as they liquidate.
Grains See Heavy Selling Pressure
Grains saw a gap lower opening on Sunday night taking back last week’s gains.
Traders were expressing disappointment there were no trade deals announced by President Trump while in Iowa.
However, weather is also looking non-threatening for the crop, especially as corn starts pollinating.
Plus, the market may be looking ahead at the July WASDE on Friday with ideas of corn yields being raised above the 181 bpa trendline yield USDA used to start the season.
Kooima thinks it might be too early for that, but the market is still trading as though yield is improving.
He says corn prices could move under $4 which will stimulate some demand and case in point private exporters reported 5.3 million bu. of corn sold to Mexico on a flash sale, with 1.1 million bu. old crop/4.2 new.
