Cattle and hogs are lower early Monday, with corn higher and soybeans lower.
Cattle Due for a Correction
Brad Kooima of Kooima Kooima Varilek says cattle futures are seeing some routine profit taking after hitting all-time and record highs again on Friday.
For the week August live cattle were up $8.15 and August feeder cattle were up nearly $16, so the markets are overbought and due for a correction he says.
Cash Cattle Are King!
The futures rally was fueled in part by higher than expected cash trade with Northern live sales at $238 to $240 and dressed prices mostly $380, up $10. Southern business was mostly $228-$230, up $4 to $6.
So, will cash trade be higher again this week?
Kooima says it’s possible with the extremely tight supplies and the leverage the feedlots and producers have, but the concern is boxed beef has started to break.
Choice boxed beef was down around $6 on Friday and is $18 off the highs and that puts packer margins back in the red and may cause them to slow the kill again this week.
Border Closure to Mexican Cattle Continues to Support Feeders
The feeder market has been red hot due to the lack of supply and that didn’t get any better with the news of the Southern border being closed to Mexican imports once again.
Hogs Follow Lower Cash and Cutouts, Tariff Uncertainty
Lean hog futures are under pressure with announced tariffs over the weekend of 30% on the EU and Mexico by Aug. 1. So far the EU is holding off on retaliation to try to work out a deal.
While most U.S. ag products are excluded due to USMCA compliance the heavily export dependent hog market doesn’t like the tariff uncertainty.
Cash trade was also lower on Friday by $5.74 on the National Direct hogs and cutouts were down another $.68.
So Kooima thinks the path of least resistance is lower.
Grains Mixed as Corn Tries to Bounce Off Contract Lows
Corn futures made new contract lows in both old and new crop overnight and have since bounced.
Most of that is technical as the funds are covering short positions with a bounce off chart support in an oversold market.
However, Kooima says there is no change in the weather and so the market may have a difficult time holding any gains with ideas of bigger yields overwhelming the trade.
Soybeans gave up early strength and are trading lower on spreads and with continued tariff concerns casting a shadow on demand.
