Cattle and hogs higher early Friday, grains are quietly mixed.
Cattle See More Record Highs
Scott Varilek, Kooima Kooima Varilek, says cattle futures are pushing back higher Friday after early losses with the continued trend of funds buying every pullback.
Both live and feeder cattle futures have been continuing to hit new contract and all-time highs.
The cattle market has been supported this week by strong cash, strong cutouts and even tighter supplies with USDA keeping the Southern border closed to Mexican cattle imports to protect against New World screwworm (NWS) entering the U.S.
Varilek says that has helped propel the feeder cattle futures nearly $20 higher in the last four sessions but the cash feeder market is also helping lead the way.
How Long Will the Bull Market in Cattle Continue?
The bull run in the cattle market has been incredible and producers are getting tired of paying margin calls on hedge positions according Varilek.
Many are wondering how long the historic rally will last.
Varilek says slaughter is down over 6% and lower placements in feedlots and on feed numbers are likely to be confirmed in Friday’s Cattle on Feed Report.
That will keep the market well supported he says.
Cash Trade Steady to Higher
Cash news has been light this week but in the North prices have been mostly $245 on a live sale basis with a few higher trades of $247 reported to a regional packer. Dressed prices on the mandatory report were at $380 to mostly $385 on Thursday, up $2 from last week.
Southern trade in Kansas reported at $240 but the South has more work to do and may wait until after the Cattle on Feed Report release.
Choice Beef Hits $408
Consumer demand has also been driving the cattle market higher as there has been no sticker shock as of yet.
Choice beef was at $408 on Thursday’s close, which is partially Labor Day buying but is also just another indication of solid demand.
Varilek says with inflation driving prices for everything higher he doesn’t think consumers believe beef is high priced relative to other purchases.
Will Hogs Continue to Follow Cattle?
Lean hog futures are higher early Friday and have no doubt received some pull from higher cattle prices.
Cash and cutouts have continued to slide and so he thinks fund traders are seeing the huge discount the futures are holding to cash and buying on that.
Can Corn and Soybeans Continue to Rally?
Corn and soybeans have had a decent week and November soybeans were up 20-cents on Thursday following a 244 point surge in December bean oil.
That buying was tied to rumors EPA was releasing its decision on the backlog of 190 plus Smaller Refinery Exemptions (SREs) and some would be remanded back to oil refiners.
However, Varilek says the market has also been trading the smaller yield projections on corn for Illinois and Iowa out of the Pro Farmer tour and strong demand.
“New crop exports have been phenomenal for corn and soybeans and there were also flash export sales on corn again this morning. Demand rallies are always stronger than supply rallies,” he says.
That leaves him thinking the rally could continue, especially as futures have pushed through overhead chart resistance.
“I am targeting November soybeans to move up to $10.75 and December corn up to a gap area at $4.32 1/4.” he explains.
