Cattle and hogs are rallying early Friday, with corn and soybeans weak.
Scott Varilek, Kooima Kooima Varilek, says cattle futures are chasing exploding cash.
Another week of record prices with Northern live sale prices $234-$235 live with some booked out all the way through the end of June. Dressed prices were at $368 to $370, up $6 to $8 from last week’s weighted average, a few deals as high as $375. In the South cash developed at $221-223, up $1-$3.
The basis is now historically wide with the June board nearly $20 under cash and will have to play catch up at some point.
However, Varilek says the board has been a bit reluctant to make a big move higher with concerns about New World Screwworm entering the U.S. and the impact that could have on consumer demand or at least the perception of beef.
Meanwhile, USDA has infused $21 million into sterile fly production in a plant in Mexico to help safeguard the spread of (NWS) into the U.S.
Despite trade talk the border will remain closed to Mexican animal imports through the end of the year, USDA has said it will re-evaluate the status every 30 days.
Still, with the border shut Varilek says the cash market for feeder is also exploding due to tight supplies.
Lean hog futures were also higher early following the strength in cash and cutouts as Varilek says packers are scrambling to source hogs due to a marketing hole created by disease. The market is holding up fairly well with news the China U.S. trade talks have stalled.
Corn and soybeans see some weakness Friday as funds continue to sell on favorable near term weather and trade uncertainty.
An appeals court has ruled to leave the tariffs in place for 10 days until a formal hearing can be held.
Exports were poor for soybeans Friday morning 5.4 million bu. old crop and 1.2 million bu. new crop. Corn exports were stronger at 36.1 million bu. old and 1.2 million new.
USDA also reported flash export sales totaling 8.3 million bu. to unknown destinations, with 2/3rds of the tender old crop.
However, Varilek says the demand news is not enough to overcome the idea of larger supplies of corn and soybeans just weeks away.
