Cattle again try to bounce early but rallies are hard to sustain as new HPAI headlines continue to circulate.
Scott Varilek, Kooima Kooima Varilek, says the uncertainty regarding High Pathogenic Avian Influenza has caused fund selling and long liquidation. He says the hope is the market can find the answers it needs to stabilize but there should be no fear for consumers about consuming milk or meat.
Varilek says it’s only a matter of time before the virus is found in the beef herd because testing has been heightened in all species. However, looking at the science it is clear the market has overreacted to the news.
Plus, cash cattle news has been better than expected and the futures are at a discount so hopefully that will help. “We thought cash would take a dive with the futures, but it has not only held up it has started to improve as the week has progressed.” He says there was some Northern trade Wednesday at $299 by a major packer and $298 on some colored cattle.
Varilek says lean hog futures are consolidating after a fresh round of contract highs in June and deferred contracts Wednesday. Funds are buying but its also been pushed by strong demand and higher cash with tighter than expected supplies. There is also some cattle hog spread unwinding taking place on any given day he adds.
Grains are mixed and continue to chop looking for fresh news. Weekly exports were poor for soybeans which is weighing on futures, despite a fresh sale of 5.6 million bushels to Mexico.
However, do the funds want to be so short heading into the planting season? Varilek says right now they don’t have any reason to get out of that position unless some weather scare hits the markets but even then, it’s more likely to happen during the growing season verses planting.
