Grain and livestock futures are mixed early Monday.
Cattle Futures Hit Retracement Levels
Live and feeder cattle futures opened mostly lower but nearby live cattle quickly pushed back higher. Brad Kooima says both futures markets are struggling as they are up into 50% retracement levels as January feeder cattle were up over $15 last week and February live cattle were $9.30 higher. He says $340 is the 50% retracement on January feeders is also where the gap area starts and coincides with the 100 and 20-day moving averages.
Can Cattle Futures Retest the Highs?
Kooima says if the markets can close above those resistance areas on the charts he is optimistic about new highs. “So we’ll see we get on top of $340 for real then I think we make a run at the highs, frankly. Maybe we fill those gap areas and then we’ll see what we’re really made of. I would not rule out the possibility of the first quarter going to new highs. I’ve said there before on your program. So we’ll see. I feel much better about the market this week than I did last. And some of that’s because of some of the fundamental stuff that’s happened,” he adds.
Cash Trade Sharply Higher Last Week
Part of the rally last week was sponsored by sharply higher cash trade for both feeders and fed cattle. He says. “The feeder cattle have been largely influenced by what has been a strong cash feeder market. The auction market for
feeder cattle has been incredibly strong and that has led us many times.”
Fed cash cattle started at $215 to $220 on Wednesday in the North but by Friday traded $222 to $224, with a few up to $225 live. The volume at $220 is up over $10 on the week versus the weighted average in Nebraska. Dressed prices ranged from $340 to $345, up $11 to $16. The South traded light volume at mostly $225 to $226, up $7 to $8.
“You know cash is king. Through this tight supply of cattle and it’s been, of course, even tighter in the south than it is here in the North. The volume of negotiated trade down there has, you know, been absolutely abysmal,” he says.
Weather a Factor
The higher cash did help clean up some of the heavy weight cattle in the North and Kooima says the record weights should also start coming down with the cold, winter weather in a good chunk of cattle feeding areas.
Boxed Beef Needs to Catch
However, he says to keep the rally going the boxed beef market needs to start moving higher as Choice boxed beef is trading at $361.20. “Yeah, and I’ve been a little disappointed there. They’re taking their sweet time about it. Now, this is kind of the seasonal week, the first four weeks of December, especially after COVID, we’ve really seen a significant seasonality that way. So we’ll see,” he says.
Is All the Bearish News Priced Into the Cattle Market?
Kooima says the one bearish factor that is still lurking is when does the USDA open the market to feeder cattle imports from Mexico. He says cold weather will help keep the New World Screwworm movement curbed and there are ample treatments to prevent and control (NWS). “Let’s get that announcement out of the way so we can get on down the road. Numbers are still going to be tight for a long time,” he adds.
Lean Hogs Bottoming
Lean hog futures ended higher for the week and cutouts were up over $3 coming into the session and the cash index is rising slowly. So, Koomia thinks the market has bottomed. “I like the way they act. We took out the last week’s high. We’re a little overbought here, but that’s the nature of hogs. They go straight up and straight down. So I don’t know if I’d stand in the way of that. The weights are a little big, starting to come down a little bit. Usually wintertime takes care of that here in this part of the world, even though they’re all in a confinement. It still does make a difference when it gets cold. The market may be here pausing a little bit at the 100 -day moving average, but I don’t know. I think summer hogs ought to be worth someplace over $100 at least, so we should get a little more follow -through there.”
Soybeans Fall Below $11
January soybeans fell below $11 overnight on continued uncertainty regarding China’s purchases. Treasury Secretary Scott Bessent said last week the purchase agreement would run through February 28 and so that is muddying the water.
” Not good technical action there Thursday and then the follow through Friday and today has me wondering whether, you know, you talked about Jan beans. I hope I’m wrong. But, you know, do we have to go all the way back to $10.20 where we had that big breakout point when the news did turn, perhaps. I still think that the beans have a bit of a story. You know, the overall ending stocks here is not a big number. And, you know, who is China going to buy beans from?”
Corn Range Bound
Corn is holding up despite the selloff in soybeans and Kooima says corn is range bound but need soybeans to stop falling. “If soybeans keep going down, though. It’s going to be tricky. And then, you know, throw wheat into the equation, I mean, the very low value of that.”
