Cattle are seeing some pressure early Friday with hogs higher. Grains all started higher then turned mixed after the IEEPA tariffs were struck down.
Cattle Cautious Awaiting Cash
Live and feeder cattle futures were weaker early in the session on Friday. Scott Varilek with Kooima Kooima Varilek says the market is awaiting cash direction. There was some $249 paid on a few head in Texas this week and some $250 in Iowa but he says that was on private deals. “Most of the feedlots are holding out for $250, $252 and we’re in a window that we can do that seasonally,” he explains.
Market Awaits USDA Report
Larger scale business may wait until after the USDA Cattle on Feed Report. The market is anticipating a bullish report with the on feed estimate at 98%, placements at 96% and marketings at 87%, which is a reflection of the tight numbers.
“These numbers just remain tight, you know, and that 87% marketing estimate. It’s just, it’s what we’re seeing in the country. You know, the packers are, they see it. That’s why they’re having to bid so hard. And you just wonder, when are we going
to find more numbers? I mean, is it coming? Is it soon that just keeps lagging on? I mean, we’re trying to cover up as much as we can with carcass weights. We’ve had great weather. So that’s just the shocker. This good of weather, this big of carcass
weights. And it’s just not affecting this market here that packers are still that tight. Can’t find the numbers shipping cattle from north to south i mean it’s been a it’s been a battle you know as far as the supply side and it’s there’s going to be some quite a bit of time before we find more numbers and belief effort retention is happening,” he says.
Possible Plant Strike at JBS Plant
The market is also concerned about a possible plant strike at the JBS beef plant in Greeley, CO as that vote is expected some time today. So the market is cautious ahead of that news. “The union is going to vote again today. Nobody knows what time or what they’re even voting on, but just the expectations of, yeah, we could see this plant strike actually happen. They do, if they do strike they have to have a week of cleanup before they can strike it’s in their their rules so it would kind of be a little bit to shift through it probably wouldn’t affect this February contract right away but so that’s what we’re waiting for it’s just kind of some anxious news some uncertainty that’s probably not helping us out right and so that’s why we have the board down a little bit probably here today.”
Technically Need to Take Out the February Highs
Technically Varilek says the live and feeder cattle futures continue to struggle to get through chart resistance at the February highs. “Yeah, it’s like the market wants to get there. It just doesn’t quite have the gas to do it yet. Maybe that one big blow -off cash week to get us there could do it. But that’s just it. We’ve had such positive basis in the cash market and April futures, you know, distancing themselves from February here. It doesn’t need to close the gap immediately if that cash happened. So it’s going to lag behind and this market does feel like it’s really high. We’re not going to ignore that fact. It is really high and it could be over. And when it is, you better believe there’s going to be quite a train of people trying to chase that market that want a piece of this pie if it does break. So fundamentals holding is strong here up front. But go close these gaps in the charts. I think that helps us maybe look through new highs. But that’s kind of the thing. Just so sluggish trying to look for closing them and getting to those new high levels.”
Hogs Up 4th Day
Lean hog futures are also up for a fourth day on short covering but can the rally continue as cash has strengthened as well. Or is this just fund buying?
“I feel really good about the hog market yet. I mean, the last break that we had, it had been a nice uptrending market. We’re going through $110. We’re I don’t wonder how high we can go. And then that’s when, you know, Trump announced, you know, we’re talking about pulling out of the USMCA and we need Mexico and Canada for the pork industry. But during that break, the funds just never really dove out. I mean, the open interest held on strong. Didn’t really bad an eye. We saw a pretty good correction. And now that it’s kind of bottom and turned, it’s like it’s game on. Here we go again and it’s starting to climb a little higher. We’re seeing the cash market move a little bit higher. It’s as high as it’s been for the year right now.
We’ve got feeder pig ice cream prices extremely high. So I think that that supply being tight with disease is still a big factor. So still liking what I see, not giving up that we can still go see some higher levels like the $120 area. It’s got some gas in the tank for it.”
