By Cassie Fish,

Some cattle numbers crunchers believe August is the timeframe for peak market-ready fed cattle supplies while others steadfastly predict September/October encases a ‘wall’ of fed cattle that will take the market down hard, regardless of front-end currentness. Some even say the supply will be so large, it will swamp the available fed cattle capacity though it’s important to point out, not everyone agrees with this assessment. Still, the drumbeat of this worry has grown louder since turning the calendar to August and yesterday’s unexpected and cheaper out-front smattering of cash cattle sales were apparently a response that worry.

After the cash market strength late last week, most of those actively involved in trading negotiated fed cattle had expected prices to be fully steady this week, maybe even a buck higher. But nervousness and corresponding lower trades in the out-front cash market quashed that thought process. An unconfirmed $116 trade for 1-14 days out has been rumored this morning. Packers are now excited by the prospect of taking out the $117 cash support that has held thus far.

No one seemed to know what caused the big futures sell-off yesterday, which was accompanied by a significant flush in open interest, down 4.1k. Maybe it was the leaky out-front cash market. Maybe it’s more fund liquidation. Maybe it’s the lackluster wholesale beef market. Regardless, Oct went limit down, reached the lowest level since late April and followed through to the downside today. After reaching $110.17 today, futures have scrambled higher, as the selling deluge subsides for a minute.

One thing most folks can agree on that the futures market is tedious and tough to trade. Punishment is frequently doled out for buying rallies or selling breaks. Open interest tells us more and more traders are moving to the sidelines.

Anyone who’s been around the cattle market knows that wrecks are rarely telegraphed ahead of time and the 2015 and 2016 fall declines were beyond predictions or perceptions.

But until the calendar had been turned to September and the wall of cattle is revealed or is no wall at all, it may be difficult if not impossible to quell the fear motivating sellers.

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