Grains are seeing moderate to heavy losses overnight in follow through selling from Thursday’s session. The break feels technical in nature even though bears are citing poor export sales data from Thursday. Soybeans on China’s Dalian Exchange were down -2.2% while soybean meal was down 2.83% and corn was down 0.64%. Heavy selling in equity markets overnight around the globe in response to the selloff in the United States Thursday. U.S. stock futures are mostly steady ahead of the Friday morning open. The volatility in equities seems tied to the surge in treasury yields according to financial media outlets.
Feeder cattle were able to maintain a modest close Thursday, but live cattle futures did not fare as well. Pressure did not only come from the inability of the market to capitalize on Wednesday’s strength but also from a disappointing weekly Export Sales report with exports down 63% from the previous week and down 66% for the four-week average. Futures may be indicating a temporary top has been reached, leaving prices to drift for a period of time. Packers still have not stepped up to the plate this week with the market only lightly tested. Friday will be a day of reckoning to see whether feedlots will hold for higher prices, sell some cattle steady with last week, or possibly hold them another week with potentially no further benefit. Some trading at steady money does not bode well for the complex. April continues to hold a strong premium to cash, but that has been slowly eroding. February ceases trading Friday, leaving April as lead month. Weakness of boxed beef certainly does not help matters much.
Another jump in cash hog prices did not trigger strong buying of futures. Pressure stemmed from lower export sales done 23% from the previous week and down 40% from the four-week average. The trade has been anticipating a slowing of exports for quite some time, but it has not happened. Now it may begin to show weakness, which could top the market. However, very strong cash may override anything negative in the near term. Technical traders may continue to try and pick the top due to the market being substantially overbought. Friday might indicate near-term price direction. Projected Saturday hog slaughter is 232,000 head.
Farm and Ranch Director Jesse Allen has your market updates: