Cattle try to rebound after a lower week in the futures and cash in the South.
Brad Kooima of Kooima Kooima Varilek says the market saw some seasonal pressure, but the break in Choice boxed beef of nearly $5 at noon on Tuesday also triggered some algorithm or fund selling.
“Plus, the market had to react to some rumors of a regional beef plant that was considering closing in Nebraska, which at this point is unsubstantiated. So, we had a little bit of outside news,” he says.
What is the outlook for this week?
Kooima thinks cash will be steady at best and could be another $1 to $2 lower.
He says Northern cash is still running at a $10 premium to the South at mostly $198 last week verses $188, down $2, in Southern feedlot areas.
“I think it’s because we have more than half of the cash cattle traded on a negotiated basis in my neck of the woods, and we’ve got a little leverage and that’s when it shows,” he adds.
The live cattle futures are holding a huge discount to the cash so he doesn’t believe a correction is in the cards.
Lean hog futures also try to bounce after making more new contract lows last week.
Kooima thinks the lows are in because the funds have liquidated most of their long position.
Grains are lower and soybeans are making new lows with the funds selling on rains forecasted for the Eastern Corn Belt.
How low will prices go?
Kooima is bearish because of the ample moisture that has been received in a big area of the corn belt doesn’t give the funds any reason to cover their massive short position.
However, he is somewhat friendly corn because of the strong demand and cash basis and that was proven in the WASDE Friday.
