(FARGO, ND) — Friday was a volatile end of the week for the grain and livestock markets as cattle digested Tyson Foods’ announcement that it is closing two facilities and looking to sell a third, while corn, soybeans and wheat all finished near the highs of the day and higher on the week.
Two market analysts who joined Market Talk on Friday pointed to the same broad conclusions from different angles: the cattle market has a structural problem it won’t solve quickly while the grain market has more going for it than it has had in a long time.
What the Tyson Plant Closures Mean for the Market
Thursday’s announcement from Tyson Foods that they are closing their Joslin, Illinois beef facility and a case-ready facility in Utah, along with the Pasco, Washington facility being up for sale, definitely impacted the cattle market on Friday. Tyson plans to consolidate capacity to facilities in Nebraska, Kansas and Texas. This was not the first packing plant news of the year and Joe Kooima with Kooima Kooima Varilek in Sioux Center, Iowa says that is exactly why the reaction stood out.
“The first two plant closures we had this year did provide a little bit of a buying opportunity,” he said. This one did not work that way. Tight numbers dominated the math while kill remains eight to ten percent below a year ago according to Kooima. But it seemed the market looked through the capacity loss on Friday.
“This one is more of an internal one too with Tyson,” Kooima said. The difference, in his opinion, is that the previous closures layered onto an already reshaped supply chain, while this decision is a deliberate business model change by a company that has been losing money in its beef segment. That distinction changed how the trade priced it.
The cash market went quiet in response. “The cash market feels like it’s a little bit of a ghost town right now,” Kooima said. Early week optimism about picking up a few dollars faded through Tuesday, and Wednesday and Thursday followed through to the downside. Kooima also flagged a technical signal worth watching. Total open interest in the cattle market has dropped below 300,000. The long speculators, he said, packed up their bags and left. On down days open interest has ticked higher, which points toward new sellers or fund selling rather than simple liquidation.
The Bottom Line Argument for Cattle
Both analysts landed in the same place on motive.
“There’s only so much bleeding any operation can take into any sector of your business,” said Brady Huck, with EmpowerAg Trading. “Tyson’s a pretty diversified company, so they got to protect their margins, protect their shareholders.”
The timing is the uncomfortable part of this equation as record low cattle inventory has given packers cover to consolidate at precisely the moment producers have the least leverage. Kooima framed it as a pendulum that never spends much time in the middle. “We need each other basically,” he said. “The packers need us and we need the packers.”
But the question of what will turn the cattle market around remains and Huck’s answer was specific. The cutout has to move. Choice boxed beef has climbed off July lows and seasonally, he said, this is when the rib primal should rally. The problem is that the rib alone will not carry it.
“We need some help from the chuck in the round,” Huck said. Those two primals account for roughly half the cutout. Imported beef keeps something of a lid on the opportunity. But if the cutout keeps climbing, it helps the packer, it helps cash, and it helps a lot of things underneath according to Huck.
Kooima pointed at demand from a different direction. The grind has held up. The middle meats have not.
“It’s the steaks, it’s the ribeyes, it’s the strip loins,” he said. He said that consumer drifted away during a long stretch of lofty prices, and finding them again will take time. But Kooima is not writing the market off and instead said to watch the greed factor. Packers making money again start looking at Saturday kills and he mentioned an upcoming ratification vote at the Cargill plant in Fort Morgan, Colorado. “It’s not gonna be dark forever,” Kooima said. “But just don’t get your head in the sand too far.”
Grains Found More Bullish Momentum on Friday
Wednesday’s WASDE delivered a corn yield cut that caught the trade leaning the wrong direction, and despite a small pause on Thursday, the market has not given the move back finishing the week higher across the board.
“It takes multiple stories to feed a bull market, and we’ve got multiple stories,” Huck said. Wheat led the rally ahead of the report while the WASDE came in supportive. Black Sea headlines then carried wheat it into the end of the week as wheat makes a run at eight dollars. Huck noted the timing matters for producers setting 2027 crop insurance pricing on wheat going in the ground this fall while both analysts also reached for the same inverted proverb: big crops get bigger and small crops, Kooima said, probably get a little bit smaller.
Huck expects further pullback on the U.S. national yield because conditions are not improving for the areas already struggling. And Huck mentioned the balance sheet is what makes things more interesting. U.S. corn ending stocks now sit near a 10% stocks-to-use ratio, while world stocks-to-use is the tightest since 2013-14. Total crop size still points toward roughly 16 billion bushels, which raises a different question according to Huck.
“Where is it at?” Huck said. He expects basis implications, and sees moving grain as one of the larger opportunities for producers this fall.
Kooima’s preference among the three is corn. He sees the market building a second leg higher with a third possible, with good chart action and fundamentals to match.
The Western Fringe and a Warning About Perception
Weather was a similar point in both conversation on Friday. Kooima says he has watched the western side of the belt carry the national yield for several years with outsized production. He does not expect that this time as choppers are already moving not far from his office in Sioux Center. Huck, sitting in Kansas, described tough sledding and pockets that are genuinely struggling but he offered this caveat.
“You’ve got to avoid backyard-itis right now,” he said. Whether the crop outside your window looks excellent or looks like a disaster, it is a poor guide to the national balance sheet, and trading off it costs money he said. Huck’s guidance is to reward the rally and cover fall cash flow without over-committing. Start with the pre-plant crop insurance price level, coverage percentage and available tools, then look honestly at individual farm production.
“What you don’t want to be is in a situation where you sold half your crop at $5, but you only raise half your crop,” Huck said. At that point there is no upside left on the bushels that do come in. His closing thought fit both halves of the week. July and August bring extremes in weather and in volatility. His advice is to stay balanced and keep the emotion out of the decisions.
“Things are going to change,” Huck said.
***WATCH*** Friday’s Market Talk interview with Joe Kooima and Brady Huck can be found below:
