Markets Now Early 6/1 Cattle Fade New NWS Case, Are Funds Done Selling? Corn Makes New Lows

Added: 2026-06-02

[00:00:04]Welcome to Markets Now. I'm Michelle Rook with Scott Varilek of Klemme Varilek. Livestock leaning to the plus side here on a Monday with a mixed trade over in the grains. And Scott, thanks for being with me on a Monday. Let's talk about the cattle market. We slid out of May in negative territory. We had a lower weekly close last week, but it's the start of a new month. Do you think we can start getting the funds at least to defend their longs or to hold here?

[00:00:32]Technically, what are you watching?

[00:00:34]>> Michelle, thanks for having me. Always appreciate it. Um yeah, let's start off with the cattle here on a Monday. It's a It's a market we got to take it a day at a time. You know, just the the volatility that we've had, uh ever-changing stories. We've had quite a bit of technical damage. Um so, we we saw a lot of funds getting out of some fund or out of the feeder contracts. Unwound some of the live cattle, still carrying a long here, but as we get this discount to cash and you know, it has a lot of, you know, negativity kind of surrounding the market.

[00:01:09]That could be what it is. We We've got a pretty big discount. We're all wondering, is this market going to roll over? Is this the big one? Is this the one that we got to chase lower? And there sure is a group of traders that want that to happen and are ready to trade it. So, they add shorts, press, press.

[00:01:23]And then it kind of starts to recover, and we have to look around. Okay, what what's the main story here? So, that's probably what we have to dive into is all those little stories here this morning, Michelle.

[00:01:33]>> All right. So, let's talk about one story that kind of tanked the market last week. We had a New World screwworm case that was 52 miles from the Texas border, but then on Friday late, we had a sheep, a 6-month-old sheep that had NWS. It was only 31 miles from the border. We actually kind of faded that here this morning. So, what is the market mentality here?

[00:01:58]>> So, we have faded it a little bit so far today and and for me it's this is not the first cases we've had. This has been dragging on for, you know, a year and a half um just on all of this screwworm talk into the market and it's been viewed as if we get it here, it's bearish, okay?

[00:02:16]What's the consumer going to think about it? That that's the the biggest fear um revolving around it. So, every time we get it, it's lower, but as you dive into it, you think, "Okay, well, what would that do if we get the screwworm here? We know we can pour, we know we can vaccinate, you know, we have uh the ability to do that, um but it's going to keep the Mexican border shut.

[00:02:37]We're not We're We're going to We're going to keep that sealed shut." The other thing is, "Okay, well, we're worried about that consumer. What are they going to think about it?"

[00:02:44]Well, Mexico has it. Uh we've got record imports from Mexico uh on beef right now, so we're not worried about that. Is it just because the public doesn't know about it? I guess so, but for me, I'm not saying that this has to be the story that is the ultimate uh bearish story here that really ends us unless we get it really spun out of control by a consumer. So, yeah, that's that's the reason, but I'm not seeing it. It It doesn't affect the meat at all. You can still eat it. Like I said, record imports from Mexico. Should be fine, so I don't know when the market's going to figure out that that's a actually a bullish uh you know, tone to the market, but uh so that's why I don't think that these these big breaks stick when we're talking about these screwworm cases here.

[00:03:28]>> Yeah, and of course, that's a headline like we talked about. It is not a food safety concern, but the algorithm traders get a hold of that and obviously they trade it negatively. What else What other headlines is the market looking at right now?

[00:03:42]>> Is anybody else getting sick of these algorithm kind of talk and trade? It seems like we're using that to talk about >> we were We were tired of that a long time ago. So, >> [laughter] >> It's just with with market being this thin, it just feels like the intraday trade has changed over the last, you know, couple of years. I mean, even the the 15-plus years that I've been doing this, it has changed, it has evolved, but now it's just more evident than ever ever when we're trying to find a direction and seeing the intraday trades that are really wild.

[00:04:12]The bids and offers, it's hard to trade.

[00:04:14]You do them, you know, try to hang in just a small order and the market's dancing all around you, so it's it's certainly been a little bit tough, but uh for me, we've got, hey, let's look at some fundamentals again. What what what's the supply? Tight supply's been still here, and that's what we're looking at. We're not going to just ramp up these numbers real quick here. Uh it's going to take some time. We're pretty current in the north.

[00:04:36]We don't have big showlists. And what's the cash feeders doing? Cash feeder market is is really hot. Trying to refill some of these uh these yards is is really tough. So, that optimism is still there uh to be had here yet, so.

[00:04:51]>> Yeah, let's talk about the cash market as well. You mentioned um you know, last week we were lower, but it was because the futures were lower first. It wasn't because of us not having a tight supply.

[00:05:04]Do you think cash can improve this week?

[00:05:06]Is that what gets the the board to come back up, or are we just going to continue to have this big discount?

[00:05:12]>> I think that would be a shot in the arm.

[00:05:14]We're trying to figure out who's who's leading this market. Is it the futures, or is it the cash? And last week it was futures um you know, bringing those cash prices down. And and cash did firm a little bit as you started at 255, and it climbed to 257, and even with some 259 reported. So, I mean, there there's a little bit of a range there, 255 to 259, but we're we're sitting here current. We have the ability to ask a higher price.

[00:05:42]Um I think we're still in a good, you you peak grilling season. Yet, we're past some of the the big weekends that we have, but we still have demand that's uh okay, has wavered, but but boxes have held a pretty decent price. So, I think that there's uh some opportunity to ask for higher cash this week. I think that's what we're going to do. Um try to ask for higher prices. I don't unless we get some sort of a a big futures break, but if we could get some firm cash, yeah, like you had said, that might be the thing that could try to pull, you know, us back to a little bit of reality and and this large discount big basis that we have, you know, maybe narrow it up that way.

[00:06:22]>> Yeah, and the funds have gotten out of how much of their length here?

[00:06:26]>> The feeders sure took a a big whack out of the the longs and in that market there. Uh live cattle, they have drifted out of some, so there has been some unwinding there and they did not elect to roll back on on several different days there. They just liquidated some contracts, so maybe we've had enough of a break. You get a little bit oversold. We'll see if we can kind of lure some of them back in here and if this open interest starts climbing this week, uh that could be the sign that we would see. If we do recover a little bit every day, uh that could be the possibility for it.

[00:07:00]>> For sure. And we are below some key moving averages, but we want to remind folks the uptrends are still intact, those uptrend lines on the charts, right?

[00:07:08]>> Yeah, it's it's been such a smoke show for for cattle for the last couple of years that we have escalated quickly.

[00:07:15]And when you you zoom out on the bigger picture of all the markets, I mean, some of these trend lines are 205 for for the live cattle for a confirmed uh shift in the trend, you've got about 250 on feeders, so numbers that are way below us. Yeah, some of these short-term trends, short-term stuff that we're watching, uh that we we broke some of those lines, but the the long-term, is this is this over, you know, is this the big one? I mean, we've got a long ways that we could break before we test some of those lines there, Michelle.

[00:07:49]>> And longer term, when you talk about fundamentals, you mentioned cash feeders being hot. And we know a lot of those areas of the western plains are dry.

[00:07:57]We've had wildfires. And so, some of those cattle went to market early. We're going to have a bigger hole out there, and we're not going to be rebuilding the herd, right?

[00:08:06]>> Yeah, that's kind of the you know, the hard thing to swallow here. We finally got to where hey, we've got profits happening all the way down to the cow-calf here and the the beef producers having a good run here and can afford to expand and has an you know, the ability to do so and then we get affected by some drought. Yes, the fires, but just it's it's it's a bigger area in that cow-calf country. So, a lot of play That's why we saw our big placements up in the last report. We're going to see them up again on the next report, and that's because we're we're selling off.

[00:08:41]Hay prices are starting to move the needle a little bit here as as guys are just going to be running short on grass in a pretty big area.

[00:08:49]It almost feels like the the rains that are happening now just came a little bit too late.

[00:08:55]Uh we're not going to get that that big bloom off the you know, the amount of grass that we're going to get here, but it just kind of kicks that can down the road yet again here that okay, we're we're still going to be tight supply for a while here and and be able to fall back on that.

[00:09:11]>> Hog market coming up for life here or for some air, I should say, after a low week lower weekly and monthly closes.

[00:09:18]August hit a 6-month low on Friday. Is this just short covering because we're so oversold? Is that the only thing we can hang our hat on?

[00:09:26]>> Yeah, let's quick talk about it before they go lower on the day.

[00:09:29]Um but that's been kind of the theme.

[00:09:32]You get a a little blip. Like, "Okay, now we're finally turning." How many legs lower does this hog market have to have, you know, it's been on five legs lower that it's had with just a small recovery and then then back to down and it just it's been very frustrating cuz I think you you feel like we've got something here. We've got some tight supply, but when you have a market that doesn't that cash settles, we don't have any cash trade. I mean, once they cash settled the hog market years and years ago, the amount of cash that they trade just went to nothing and you know, less than 1% market is actually traded cash and that's going to that's going to tell us what this future's price should be. You don't have the ability to try to ask for higher. If you had some leverage, were able to negotiate on on what you have, you could get a higher price, but that industry has just long gone from from that attitude. So, that's just my speech to the cattle guys for sure on that because this is a prime example. They just keep grinding lower and when hogs want to trend, they trend.

[00:10:35]We feel like they have the ability to rally and just have not been able to do so. So, they poke their head above $100 on the cutout briefly, back below it again.

[00:10:45]Demand lackluster. That would need to be a shot in the arm to probably help this tight supply here.

[00:10:50]>> Yeah. Well, funds have been liquidating across the commodity complex and corn has gotten cut up in that as well. And even this morning when you have crude oil up over $6, the corn market can't rally. Are we just too beat up technically or what's going on?

[00:11:07]>> Yeah, that's what it feels like. It's you might have been a little bit negative corn, but it even for for corn bears, you're looking at it wondering why it can't rally from here cuz like you said, crude oil's up $6 today. I ran war not going away. Shocker. Look at our surprised face, you know, that that her peace talks aren't working.

[00:11:29]So, I guess our anticipation is going to be that's going to keep dragging out.

[00:11:33]Energies are figuring it back out again and shooting back higher and then corn can't even get higher today. We've got July futures below where the May went off.

[00:11:42]Um and just can't find any life. We've had wheat go to 750. Corn still can't go.

[00:11:47]So, I guess we've got to turn to you that basis really never got Yeah, got strong at all. Stayed weak um throughout these rallies. So, it must just be short supply, but you would think eventually it's got to wake up here. I mean, even myself I'm thinking we should be able to at least find some value buying here. Um just with the rest of the commodities moving. Yes, the funds have liquidated quite a bit. They've done it commodity wide just like you said and you would think corn would be able to try to get a little bit of life there. So, holding out some hopes that we can try to put in a little bottom here and rally a little bit.

[00:12:21]>> In the meantime, even with some liquidation in the soybean complex, soybeans have stayed pretty sideways and as long as bean oil keeps cracking out new contract highs like it is this morning, do you think we'll be pretty well supported?

[00:12:33]>> Yeah, it feels that way. It's a rarity that we can say beans have been sideways for for quite a time and it's it's been good 3 months and we're still at some of these same prices here. So, you got some good margins with that you had mentioned the the meal has rallied quite a ways here in the last couple of weeks. Uh we've got soy oil. So, it's been able to maintain pretty good.

[00:12:53]Even the fact that we got more acres and we've got South America throwing out another record crop. We've still been able to do it. So, if grains want to get weak, I I thought beans is where they would turn, but if if that's holding pretty strong, you know, throw that back into corn. I I think that these markets should be able to do a little bit better than they have been here.

[00:13:13]>> For sure. All right, it has been resilient. That's for sure. All right, thank you so much Scott Varley with Kluis Commodity Varley and Markets Now.