Cattle and hogs both end higher on Thursday, with grains mostly lower except HRW wheat.
Scott Varilek, Kooima Kooima Varilek, says live and feeder cattle futures closed strong on Thursday and for the week, pushed by cash.
Cash developed in Nebraska at $312 live, with dressed deals at $332 to $335, $4 to $7 higher than last week’s WA of $328.07.
Kansas &Texas at $210, $6 higher than the $204 WA last week.
Varilek says the fundamentals finally took hold and he thinks its possible for live cattle futures to retest the recent contract highs set in early April.
Feeder cattle futures were also sharply higher but only April made contract highs trying to align with the index before expiration, but again the deferreds are likely to retest the contract highs in his opinion.
The fireworks happened prior to the release of the USDA Cattle on Feed Report.
On feed came in at 98% versus the trade guess of 98.3%.
Placements were at 105%, which was above the estimate of 103.7%.
Marketings were at 101%, in line with the 100.7% guess.
Scott Varilek, Kooima Kooima Varilek, says slightly higher placements than expectations are not a concern to him.
First, the higher placements figure is largely due to the small number of cattle moved into feedlots in March 2024.
“So, comparing to that small number I think we’re going to be able to fight this off pretty quick,” he says.
Secondly there may have been a shift from month to month in regards to when some of the cattle were placed.
However, the placements were higher in most states as Varilek says there is a big run of grass cattle that is happening right now.
“It’s not something that’s alarming saying we found a bunch more cattle. I do not think that that’s the case. So could be some more cattle coming in from Mexico as we’ve you know we’ve got some delayed on you know delayed tariff news we’ve got that border kind of open with Mexico here to start the year.
So, could be some more of the Southern cattle moving across but it does look like it’s pretty spread out across the states there wasn’t just one state that jumped off the books,” he explains.
He says the 98% on feed number seems more in line with numbers in the country than the past few months when inventory in feedlots was pegged at 100% or slightly above.
“You know, seeing all of those 100 % on feed or 101%, it just didn’t even feel like that’s not the market that we’re trading. So 98 is more of an accurate number for me to say, yeah, we have less numbers. That’s why cash is doing what it’s doing right now,” he adds.
The steer to heifer breakdown showed steers at 100% of a year ago, but heifers at 96% which indicates to Varilek that heifer retention is taking place.
“The cow herd is depleted You know at a pretty big level. Slaughter cow prices have been amazing. So, it’s pretty easy to cull off some of those cows that are maybe lower producing and try to re up your genetics. So, we are seeing some heifer retention,” he says.
Lean hogs finish higher Thursday pushed by firming cash and short covering or technical buying but contracts are starting to run into chart resistance.
Corn and soybeans were slightly lower on Thursday but new crop corn and soybeans gained on the week and outpaced old crop contracts.
Varilek says that may be a function of weather but the market is also transitioning away from being demand to supply driven this time of year.
He says demand is still strong with evidence from the weekly exports on corn and soybeans Thursday.
