Grains are lower early Friday, with cattle and hogs higher.
Scott Varilek with Kooima Kooima Varilek says cattle futures are trying to recover after the trifecta that tanked the futures Thursday and pulled down cash as well.
The news has been bearish this week for cattle including the reopening of the southern border to Mexican feeder cattle, talk of kill cuts by the packer and a new strain of bird flu.
USDA allowed 500 head of cattle through the border the first day but is ramping up to 3000 head a day quickly with an eventual goal of 10,000 head.
That has weighed on the feeder cattle futures this week with the increased supply pressure.
Additionally, the market got spooked as USDA announced a new strain of HPAI or bird flu was discovered in a Nevada dairy cattle herd and it has been linked to one human death.
Packers have also been talking about kill cuts to prop up their margins, which are in the red, as well as boxed beef valued.
Cash trade has been pressured this week as well which also weighed on futures.
In the South, cash was mostly $206 live, down $2 from last week’s weighted averages while Northern trade live was at $208 and dressed prices were mostly $328, which was steady to $1 lower.
Varilek says futures are at a significant discount to cash and that should be supportive as well as the fact the break in futures did not do technical damage.
“We are still a few dollars above long term trend lines on the charts in the cattle,” he explains.
Lean hog futures traded 2-sided early but are working in strong exports, the higher lean hog index and higher cutouts, which made a new high for the move.
However, Varilek says the market is running into technical resistance.
Grains futures are setting back after the higher day Thursday which was led by wheat.
Profit taking is setting in heading into the weekend and as some contracts continue to get stopped out by chart resistance.
However, the market is still watching tariff headlines and South American weather for direction.
Argentina has received some beneficial rains this week which may be weighing on corn, soybeans and especially the soybean meal market.
