Cattle, corn and soybeans are all lower early Tuesday with hogs trying to recover after a lower start.
Joe Kooima of Kooima Kooima Varilek says live and feeder cattle futures had a gap lower opening this morning on news from USDA of a phased re-opening of the border to Mexican cattle starting July 7.
He says it will start in the South in Douglas, AZ and then two ports in New Mexico will reopen in July, followed by Del Rio and Laredo, TX in August.
The market was anticipating the border would be closed to cattle imports until possibly the end of the year to keep New World Screwworm out of the U.S. so this is a shock to the market.
Kooima says it may take a day or so to work the news in.
“I’m gonna be cautious here. I don’t think this is probably just a one -day thing. You have the funds that probably you know have close to half of the open interest in the feeders, especially. So they’re gonna need a bigger reason to say we’re gonna stay put with what we got. Otherwise if this is gonna continue the in the fashion that we have and start doing some technical damage,” he explains.
Cash trade was lower last week with the weighted average at $229.51, down $5.37 and the market is anticipating a soft cash market again in this holiday shortened week.
However, the futures are still holding a discount, which should be supportive.
Lean hog futures opening lower Tuesday with cattle but then saw some short covering in the back months as the market is seeing disease issues as supportive.
The market has seen a correction off the contract highs which coincided with the Hogs and Pigs Report showing a larger herd than anticipated at 100.3%, but Kooima thinks the cooling off of cash and cutouts had more to do with the correction.
Row crop futures are lower with corn making new contract lows again as Kooima says weather still looks non-threatening and crop ratings improved 3% to 73% good to excellent on corn and remained at 66% on soybeans.
Additionally, there was not bullish catalyst in Monday’s USDA Reports as most numbers came in close to expectations.
