Cattle and hog futures declined while grains ended mostly higher on May 4, with market analysts discussing whether cattle prices have reached their peak. Live and feeder cattle futures fell for a second consecutive day following record highs last Friday, closing lower on significant volume and prompting speculation about a technical top in the market.
Brad Kooima of Kooima Kooima Varilek said it is risky to try to predict a high but noted the recent activity fits the profile of a technical top. “Some 45 years ago I learned a reversal has to be from a terminal area, which is just a fancy way of saying an important area. And I don’t know what’s more important than the all time high. So, we did that on Friday. It has to be done on big volume. It was 86,000. It should be accompanied by an increase in open interest, and it was. And then the third thing is that it should have followed through the following day,” he explains.
Kooima added that while markets were still lower, they recovered significantly from intraday lows: “While it was still lower, it was a long ways from where it was.” He also highlighted that June live cattle remained above key moving averages and August feeders held critical support levels despite volatility.
Cash trade in cattle hit record highs last week with Southern deals mostly $244 to $256 and Northern trades at $255 to $258 live or around $400 dressed. The USDA reported an average steer price at $255.02 per head—a new record—making further increases challenging this week.
Market participants are watching several factors including packers’ efforts to cut kills this week for margin support and external pressures such as rising gas prices and declines in the stock market which could affect consumer demand for beef products.
Adding uncertainty is renewed attention from government officials; USDA Secretary Brooke Rollins reiterated efforts by the Trump administration to reduce beef prices, including Department of Justice investigations into major beef packers: “I’m not sure that Secretary Rollins commentary this morning was helpful to the market either… probably if you’re an algorithm trader… you might think… I don’t think I want to be participating in this kind of uncertainty.”
Lean hogs also fell amid continued fund liquidation after reports of pseudorabies cases in Iowa last week caused concern about supply disruptions: “He outlined how everything got tested… We’ve got protocol in place and we haven’t had a case since 2004,” Kooima said regarding Iowa Secretary of Agriculture Mike Naig’s comments about containment measures.
Soybeans rose between 16-21 cents Monday with both old- and new-crop contracts making fresh highs amid optimism ahead of next week’s trade summit in China as well as higher energy prices driving up commodity values overall: “The hope that we get something tangible with this China visit… but that is out there,” he stated.
Corn also made new highs with December contracts closing above $5 driven by fund buying exceeding 80,000 contracts alongside weather concerns, acreage reductions, fertilizer issues and anticipation over potential Chinese purchases at the upcoming summit.
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