Cattle open lower and then try to recover in a week that has seen a correction with plant closure concerns, lower boxed beef values and softer cash, at least in the South.
Scott Varilek, Kooima Kooima Varilek, says if this correction is an intermediate top he doesn’t think the correction will be huge in the futures due to the big discount the futures are holding to the cash, plus the continued tight supplies.
Cash trade was still strong in the North at $198 and $312 dressed. Meanwhile, Southern cash trade has been softer this week at mostly $188, but there have been sales ranging from $185 to $191.
Varilek says the break early in the week may have been tied to the break in boxed beef values.
It was also linked to some disruptions at beef processing plants. Tyson in Dakota City, Nebraska was down on Monday due to a gas leak.
However, Varilek says, “There were some rumors that a Nebraska beef processing plant may have been closing. Even though it wasn’t confirmed that spooked the market and caused part of the the sell off in cattle,” he says.
A spokesman with Nebraska Beef confirmed that they ran full shifts every day during the week of July 8-12.
Mike Weaver, legal counsel for Nebraska Beef says, “Additionally, Nebraska Beef is not closing. Company management has been in the industry for over 60 years and has always operated the business to account for industry cyclicality, and the adverse market conditions that may occur as a result of herd adjustments. The Company is well capitalized, debt-free, and intends to be in the beef industry as long as there is an industry.”
Another negative bird flu story out of the UK was also out ahead of the open but Varilek doesn’t think the market traded it.
Lean hogs see a short covering bounce as they are oversold.
Grains are lower in anticipation of a bearish WASDE, but he says much of it is already priced in after this week’s selloff.
