Cattle futures saw significant volatility on April 17, starting higher before dropping sharply after mid-morning, while grains also fell as the Strait of Hormuz reopened. Scott Varilek of Kooima Kooima Varilek said cattle markets initially bounced following two days of profit taking but later declined, confirming a lower weekly close from record highs.
The market movement is important for producers and traders as it signals possible shifts in supply and demand, especially with ongoing speculation about U.S.-Mexico border policy changes. The potential announcement by Secretary Brooke Rollins regarding the resumption of Mexican cattle imports has added uncertainty to the market.
Varilek explained that with prices at historic levels—$50 higher than last year for similar cattle—the risk remains high. “We’ve got an on-feed report coming up with 100% on-feed estimate, and we are $50 higher than where we were last year on the same cattle on-feed. So we’re at some impressive levels here, Michelle,” he said. He noted that although there have been many attempts to call a top in the market, current conditions suggest potential for one: “That’s going to be the question here because it it looks like hey look at the time of year we’re in…for about the you know 75th time we’ll try to call a top in this market but it I don’t know that we want to try to do that it’s just the potential is there for it you know.”
Technical indicators point to $243 as a key support level for June live cattle contracts. “Funds don’t sell highs. They don’t buy lows…it kind of sounds like around that $243 area on the June is
the spot that they’re looking at,” Varilek said.
Concerns over USDA actions also played into Friday’s trading session. “I mean, will there be an announcement? Will there not? We’re just kind of all hands on deck…But you just would expect that she’s going to say something,” Varilek said regarding Secretary Rollins’ visit to Texas for a groundbreaking event and possible border news.
Other livestock markets faced pressure too; lean hog futures hit new lows amid disease concerns in herds: “Hogs are trendy and it’s making a third leg lower…Let it trend lower here,” according to Varilek.
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