By Cassie Fish, http://cassandrafish.com
The sell-off began Friday and a three-day weekend proved little interruption for CME cattle futures which resumed their downtrend soon after this morningâ€™s opening. Though after breaking 462 points below last Thursdayâ€™s high in most active Aug LC, futures stopped short of last weekâ€™s low and reversed to rally a quick 200 points, making a new high for the day. Break or rally, the continuation of the extra-wide basis and general futures volatility is a constant source of frustration and anxiety for many.
June 2016, the best beef month in years, is only a few days gone yet CME cattle futures continue to regularly demonstrate -on a whim- their willingness to dismiss bullish fundamentals in favor of a pervasive negative bias. Though futures traders eye each rally with great skepticism, more and more pundits are offering predictions that the cash market has or will soon finally bottom, in spite of vacillating futures action. Of course, there is also the impending basis change to complicate the July trading landscape further.
Predictions for a possible â€œearlyâ€ cattle market bottom come partly because this yearâ€™s cash market break is one of the biggest in history already. Add to that, voracious 2016 kill levels and greatly improved retail beef features and consumer buying and a bottom sooner, rather than later, seems reasonable.
Beef news is still good today as talk that weekend beef clearance over the holiday was good to very good and the cutout this week ought to hold together as fill-in buying occurs. More wholesale seasonal weakness is expected in July but this week, so far so good.
Last yearâ€™s kill for this week was 522k and this week the guesses range widely from 515k to 550k. Last weekâ€™s slaughter of 598k was 5-10k lighter than expected.
Bids by one regional have surfaced this morning in eastern Nebraska, $6 dressed cheaper than most cash traded last week. Most expect cash prices to trade fully steady this week after last weekâ€™s exceptionally big negotiated cash trade volume replenished most packer inventories.