Cattle Slumps as Tyson Closures Weigh, Grains Rally on Multiple Bull Stories

Friday was a day of contrasting fortunes for the cattle and grain markets. The announcement by Tyson Foods that it would close two facilities and sell a third weighed heavily on the cattle market, while grains finished near their highs of the day and higher on the week.

Market analysts Joe Kooima with Kooima Kooima Varilek in Sioux Center, Iowa, and Brady Huck with EmpowerAg Trading agreed that the cattle market faces structural problems. The Tyson plant closures are seen as a deliberate business model change by a company struggling to make money in its beef segment, rather than an isolated incident.

Kooima noted that the previous closures layered onto an already reshaped supply chain, whereas this decision is driven by internal factors. He also pointed out that total open interest in the cattle market has dropped below 300,000, a technical signal worth watching. Kooima described the cash market as 'a little bit of a ghost town'.

Huck's argument for the cattle market centered around the cutout price, which needs to move higher to help packers, cash, and producers. He expects the rib primal to rally seasonally, but noted that it alone will not carry the market. Kooima, on the other hand, looked at demand from a different angle, highlighting the grind's resilience.

Grains, however, found more bullish momentum on Friday. The WASDE report delivered a corn yield cut, but the market has not given back the move, finishing higher across the board. Huck noted that it takes multiple stories to feed a bull market, and they've got multiple stories in grains.