Grains are mixed heading into the WASDE, with cattle lower, hogs mostly higher.
Scott Varilek with Kooima Kooima Varilek says cattle are trading lower Thursday morning with the retreat in the stock market, so the roller coaster ride continues.
Outside markets saw one of the biggest recoveries in history Wednesday after word reciprocal tariffs would be delayed 90-days.
He thinks the tariff delay by the administration may have been a response to the bond market.
“I mean, you saw the bond market tanking so fast, I think it’s just other countries unloading our debt to where that started to get a little spooky on the economy front,” he says.
However, he says the tariff wars are not over and the volatility in the markets and the uncertainty will remain.
“Another three months down the road, are we going to be in the same boat, you know, fighting all of this again? So just hoping we can get some resolution out of this, but a lot of uncertainty is still looming.”
Varilek points out that the cattle markets are highly correlated with the stock market or the S&P and so it will ebb and flow with that market.
“We’re at the mercy of Dow Jones and S &Ps right now and the sharp turnaround yesterday just had people dancing,” he says.
The tariff delay did at last stop the talk of global recession but the trade war with China is escalating.
China is continuing to throw stimulus at their economy to try to shore it up.
Fundamentals, Varilek says, are getting lost in the headlines and for the cattle market the tight supply hasn’t changed, plus consumer demand has stayed strong.
Some cash cattle trade has developed in the North at $208 live and mostly $328 dressed but ranging from $327 to $330 as reported by USDA yesterday, as well as some light live trade at $204 in the South.
“There’s a lot of money on the table here for these producers. So, you know, these $400 head closeouts, $500 head, maybe they’re just $300. That’s big money. So if you could get that $208 yesterday which quite a few guys were getting bid it and I said I don’t know why you’re not taking it,” he explains.
Lean hogs are trying to recover and seeing some short covering in the deferred contracts.
The market is trading better with Mexico unaffected by the tariffs and China is a smaller export market as they rely on their own production he says.
Grains are mixed ahead of the April WASDE but Varilek isn’t expecting much market moving news out of the report.
He adds that the grain markets are still more headline driven especially in regards to tariffs, but did shake off the China counter tariffs quite well.
