Posted on: Â 5/26/2016
By Cassie Fish, http://cassandrafish.com
Some packers appear to need cattle for this and next weekâ€™s kill and are beating the bushes for inventory this morning. As bids inch higher, CME cattle futures have responded by rallying hard after another big sell-off earlier today.
Yesterday morning, the new on-line fed cattle auction saw a few cattle trade from $123-125.50. Today a few more cattle have traded at $125 but some are passing it. Bids by regional packers of $198 dressed, which is the highest price dressed paid this week, are being passed as well. For now, the cash market seems to have found firm footing.
Futures have taken out the highs from the last two trading days after making new lows for the move in most months. To really be convincing, Mondayâ€™s high needs to be eclipsed, the gap filled and a higher close on the week tomorrow would cinch another short-term low has been made. Key moving averages are gathered just above the gap. There is still plenty of time for that to occur. Futures are oversold, though not grossly so and there is plenty of room to follow-through.
As the choice/select spread pushes out to almost $20 today, the statistics continue to remind cattle traders that front-end supplies continue to become more current. The push/pull of improving fundamentals and expectations of seasonal weakness continue to take turns influencing futures trading. Average cattle carcass weights dropped another pound according to the USDA data released this morning, not as impressive as a week ago but still 3 pounds below year ago record highs.
Expectations are also very high that this weekendâ€™s retail beef movement will be excellent and fill-in buying next week will be as well.
As has been the pattern of the cattle market in 2016, the good news comes in waves followed by another round of doubt that good news will sustain. As the calendar turns to June next week so will tradersâ€™ attention to considering just when and where the summer lows will land.
But at least this week, actual demand for negotiated cattle has pulled futures back from the brink.
The Beef isÂ published by Consolidated Beef Producers…for more infoÂ click here.
Disclaimer: Â The Beef, CBP nor Cassie Fish shall not be liable for decisions or actions taken based on the data/information/opinions.