Cattle Prices Struggle Amid Wheat Rally and Strong Soybean Demand

Cattle prices continued to struggle in the first week of August as traders searched for direction after a rocky July. According to Scott Varilek, a trader at Kooima Kooima Varilek, cattle have been swinging between lower and higher prices within the same session with little follow-through. He expects the market to get tougher in late August and September due to weaker demand and thinning open interest.

Varilek also pointed out that cow slaughter numbers have dropped off as ranchers try to hold cows back for another calf, indicating a shift towards rebuilding the herd. High prices are starting to cure high prices, he said. Lean hogs, on the other hand, offered little excitement with sluggish cash and cutout prices.

On the grain side, the complex found support from a wheat rally tied to Black Sea escalation. Mike Castle, senior commodities economist at StoneX, pointed to intensifying attacks on vessels and port infrastructure in the Black Sea between Russia and Ukraine as a key factor behind the rally. He also highlighted fresh flash sales of new-crop soybeans to China, totaling roughly 1.116 million tons.

Castle believes that demand is the more compelling story heading into fall, particularly for soybeans. The United States has crushed roughly 500 million more bushels of soybeans annually than it was four years ago, leaving far less exportable surplus even when export sales look historically normal. Fertilizer markets are also watching the Strait of Hormuz due to disruptions in sulfur exports.