By Cassie Fish, http://cassandrafish.com

CME cattle futures have used this week to stage a very modest short term correction after getting hammered in recent weeks. The rally has not been strong enough to convince at least some that the bottom is in, especially when looking at the calendar, as the seasonal for cash cattle prices is lower. The open interest drop has stopped this week, an indication that the get-me-out selling is over. Yet, there seems to be waning confidence on just how much futures can regain of the $16 lost since March 14. For now, the 100-day moving average is stopping advances in most active June LC. Only soon-to-expire April LC is trading above its 100-day.

Boxed beef prices are supposed to be gaining strength for their seasonal rally, but instead are floundering. This has kept packers on the sidelines as they work hard to stop red ink from growing. The smaller the May/June boxed beef cutout price rally, the less incentive packers have to seasonally ramp up production. And it is demand for cattle to supply that production that is the tell on price discovery for fed cattle. Less demand means smaller weekly purchases. Cattle feeders have added days on feed to cattle on feed inventory to make those breakevens work financially.

The extra days are reflected in the weekly carcass weight data that was released today, 919 pounds for steers the week ended April 6. That is down 4 pounds from a week ago, a reflection of the seasonal decline in weights that normally continues until late May but is 27 pounds above a year ago and the highest in history for this date. YTD 2024 average steer carcass weight is 919 pounds and that number will likely grow as the year progresses.

So far this week the cash fed cattle trade volume has been tiny. Bids of $180 south and $182 to $183 north are being passed. 

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