Cattle Futures Dip as Hogs and Grains Rebound

Cattle futures faced a downturn on Monday following lower weekly closes and technical resistance. Joe Kooima of Kooima Kooima Varilek noted that while the market initially showed promise with technical patterns like an inverted head and shoulders bottom in feeders and an ABC correction in live cattle, the momentum faltered. "Then Friday it just the air was let out of the balloon unfortunately. So a nasty look on the on the charts and you are seeing hangover today," he said.

The fundamentals also weighed on the market, with boxed beef values declining sharply. Choice cutouts dropped nearly $9 on Thursday and Friday due to an increased slaughter pace, totaling 548,000 head for the week. Kooima attributed the weakness to higher imported beef volumes and a $20 price gap between choice and select cuts, complicating demand assessments. Cull cow prices plummeted to $140 from $200 a month ago.

Lean hog futures, meanwhile, saw a rise on Monday, driven by short covering and technical reversals. Kooima cautioned that the market remains challenging to trade due to its vertical integration and lack of clear cash momentum. Despite multi-year lows in cash and cutout values, he expressed hope that the funds would respect the technical reversal.

Grain futures also rebounded after a weak previous week, with end user buying emerging at lower prices. Key support levels were held, and flash sales of corn to Mexico and soybeans to unknown destinations provided some optimism. Additionally, a war premium was added as fighting escalated in the Black Sea, disrupting grain exports through Ukraine’s port of Odessa.