Cattle and hogs are higher Monday with grain markets lower.
Cattle Surge Higher on New World Screwworm News
Brad Kooima of Kooima Kooima Varilek says live and feeder cattle futures are sharply higher on Monday as news came Sunday evening that New World screwworm (NWS) had been detected 70 miles from the U.S. Mexican border in an 8-month-old calf from a transported herd.
USDA said in a press release Sunday that Mexico’s National Service of Agro-Alimentary Health, Safety, and Quality (SENASICA) confirmed a new case of NWS in Sabinas Hidalgo, located in the state of Nuevo León. This is now the northernmost detection of NWS during this outbreak.
The USDA has activated its 5-point plan to keep NWS out of the country and more announcements are expected in the next 24 hours.
Could Cattle Futures Retest the Highs?
Fund and technical buying was triggered in the cattle futures especially as both markets got back above the 20-day moving averages, which was the breakout level that spurred the recent correction.
If the futures close above these levels Kooima thinks the futures could retest the recent contract and record highs.
Futures Rally Could Mean Higher Cash Cattle Trade
Kooima says if the strong technical action in the cattle futures continues to build this week he thinks it is very likely the cash trade could be higher than a week ago.
He thought cash traded better than expected last week with the South at mostly $240, which was steady and the North at $236 to $238.
Cattle on Feed Neutral
Kooima viewed Friday’s USDA Cattle on Feed report as neutral as the major categories came in close to expectations.
On feed was at 98.9% of a year ago, placements were at 90.1% and marketings at 86.4%.
However, he says with the low placement and marketings he thinks its a sign of heifer retention.
And he explains the lower placements in Iowa, which were down 16%, the function of feedlots already being full.
Hogs Continue Higher
Lean hog futures continue to move higher with some spillover from cattle and continued fund buying as contracts are near contract highs.
However, Kooima is concerned that slaughter pace last week at 2,593,000 was up over last year by 76,000 head and weights are also climbing.
Soybeans Anchor Grains as Argentina Drops Export Tax
Soybeans have taken out key support areas Monday morning with hangover from the disappointing China talks plus a new wrinkle in the Southern Hemisphere.
Argentina suspended their export tax on grains until Oct. 31st in an effort to move stored stocks and ease their financial turmoil.
That is weighing on the soybean, bean oil and meal markets, which is also dragging down corn and wheat.
