Grain and livestock futures are lower early in the session Monday.
Cattle Futures Correct
Live and feeder cattle futures saw a higher opening but quickly saw some profit taking set in. Brad Kooima with Kooima Kooima Varilek says the futures are overbought after last week’s higher weekly closes and rallying nine out of the last 10 sessions. So this is a healthy correction. He says the market does need to hold support on the February live cattle though at around $228.70 and then below that at $225.65.
Cash Sharply Higher Last Week: Will it Repeat This Week?
The futures were pushed by sharply higher cash trade. In the North deal started at $225 but Wednesday got up to mostly $230, up $7 live. USDA’s mandatory report shows a range of $227 up to $234 in the North live. Dressed prices were mostly $353 to $355, up $10 to $12. In the South most of the business occurred at $230 as well, up $6.
Kooima says the good news is the negotiated totals are high and so that will help clean up some of the heavy cattle weights in the North. The bad news is that may mean packers won’t need as much inventory and so cash may only be steady this week he adds.
Beef Plant Closure
On Friday, news reports indicated JBS was closing a beef plant in Riverside, California. Kooima says it should not have a big impact on the market because it is a small cut and wrap plant and doesn’t do any slaughtering or initial processing. Plus, the plant is small with only around 400 workers.
Boxed Beef in a Slump
Boxed beef continues to see pressure which is not the typical seasonal pattern according to Kooima. Choice boxes slipped again last week and Choice is under $360, now at $357.44. This is a bit concerning he says and likely puts packer margins back in the red.
Lean Hogs Also Correct
Lean hog futures are also correcting on Monday morning. After two higher weekly closes Kooima says that market is also overbought and due for a setback. However, technically the market still looks strong and the cash market is grinding higher with the Lean Hog Index up 23 cents at $82.80 on Monday.
Soybeans Make New Lows for the Move
Soybean futures made new lows for the move on Monday after another lower weekly close and losses of nearly 30-cents. Fund liquidation is part of the pressure as the lagging Commitment of Traders Report shows funds were long nearly 230,000 contracts in soybeans when the market peaked in mid-November and so they are still selling. Kooima says the market is also attempting to fill the chart gap area left on Oct. 24 and so the close will be important to see if the market can bounce off that level or further tanks. This comes despite additional flash sales being confirmed by China on Monday with 5.0 million bu. sold.
Corn Lower With Soybeans
Corn futures were lower in tandem with soybeans Monday despite strong demand and another 5.9 million bu. flash sale of export business to unknown destinations announced. Kooima says the market is still in its trading range but has slipped down to the bottom end of the range. Without any market moving news corn may continue to trade within that range.
