Corn and soybeans drift early Monday with mixed trade in cattle and hogs
Cattle Futures Post First Lower Weekly Close in Weeks
Live and feeder cattle futures were down on Friday and for the week, the first lower weekly closes since June.
Brad Kooima, Kooima Kooima Varilek, says the uptrend line on the charts is also starting to be violated.
Is a Bigger Correction Coming in Cattle?
That alone does not signal a top for him technically as he is still watching the 20-day moving averages on the October and December live cattle.
Funds are long over 130,000 contracts in the live cattle market and have been defending that chart point for several weeks.
On Monday the 20-day falls on the October at $234.45 and in the December at $236.10.
A close below those chart areas could cause the funds to liquidate causing a more sizable correction.
Northern Cash Losing Its Premium to the South
The other fundamental factor that weighed on cattle futures last week was the cash market.
Fed cash cattle trade was at mostly $243 in the North, down $2 from the previous week, while Southern trade was $242 to $243.
Kooima says the North has lost its premium to the Southern cash trade and bull markets are generally led by the North.
“Because that is where we typically trade more negotiated cattle and are more current. Right now there are cattle that are being moved from the North farther South with their tighter numbers and so the freight cost is starting to eat into the Northern cash prices,” he says.
He says that is understandable as well since the South has had fewer feeder cattle supplies with the border closed to Mexican imports.
Boxed Beef Cooling Seasonally
The boxed beef market is also starting to cool and that is the normal seasonal as demand trickles off after Labor Day and the end of the official grilling season.
Choice boxes were down $4.65 last week and closed at $410.76.
However, Kooima points out that prices were historically high at the second highest prices since COVID, so they could see a correction and not mean much relative to cash cattle prices.
Lean Hogs Consolidate Under Contract Highs
Lean hog futures opened mixed and are seeing some consolidation off of contract highs on Friday and higher weekly closes.
Funds have been buying the hog futures and extended their length last week to nearly 124,000 contracts.
Kooima says there are no signs yet on the charts of that technical buying slowing down and cutouts were also up $255 on Friday, now at $115.87 with the Lean Hog Index at $105.92.
Grains Chop Ahead of WASDE
Grain markets were all lower for the week last week but are chopping around early Monday.
Kooima says that may be the trend for most of the week heading into the September WASDE.
He thinks the crop is getting smaller due to disease and dry conditions in the Eastern Midwest but is not sure it will be adequately reflected in this report.
“I am getting a little bullish on corn because of that and would rather be a buyer than a seller at these price levels,” he adds.
