Grain and livestock futures started Monday mostly higher.
Cattle Futures Follow Record Cash Higher
Live and feeder cattle futures were higher to start Monday on the heels of record cash trade to end last week.
Brad Kooima of Kooima Kooima Varilek says cash cattle trade in the North live ranged from $242 to $247. Dressed trade ranged from $380 to $390, but the volume was at $383, up $3. The five area weighted average will be at a new record when printed by USDA.
With the big discount the futures are holding to cash that helped sponsor the recovery in the futures on Friday and the market was impressively able to shake off the selling in the financial sector tied to tariff fears.
Can Cattle Futures Retest Highs?
Will the cattle futures retest last week’s all-time highs and negate the bearish reversals left last Thursday?
Kooima cautions that prices are getting high enough that further increases may be a heavy lift.
Plus, packers are collectively looking at more kill cuts this week with a major announcing a 32 hour kill this week to try to prop up margins which have been in the red.
Volatility High in Cattle
Kooima says the volatility is high in the cattle complex and even a steep correction would not mean much from a percentage basis with prices as high as they are.
However, he cautions producers to exercise risk management to protect their margins.
Lean Hog Futures See Spillover
Lean hogs futures started higher early Monday as they felt spillover strength from the higher cattle complex.
However, Kooima is less optimistic about futures being able to continue to push higher, even with the tighter slaughter numbers tied to disease.
Cash prices were under pressure on Friday with the National Direct hogs down $2.76 and the Lean Hog Index was also down $.11 at $107.15, which will serve as a headwind for the market. However, cutouts did move higher by $2.94.
Grains Try to Recover
After an ugly lower week and month for corn and soybeans the market is seeing a slight technical or short covering bounce on Monday.
The key is can it hold with mostly favorable weather forecasts and the market already bearish about increased production and ending stocks in the Aug. 12 WASDE.
“I have done a fair bit of traveling in the region recently and the crop looks good everywhere I traveled,” he says.
Plus, there is still some uncertainty about tariff retaliation as the Aug. 7 implementation deadline kicks in for tariffs and there could be retaliation.
While there has been news accounts that there is “the makeup of a deal” with China. So far there is not solid proof of an extension of the tariff delay past Aug. 12 which is casting doubt on a deal being reached before harvest and the prime soybean export window.
