CME cattle futures are headed lowerÂ again as the teeter totter continues. Though Feb LC on back look like they areÂ no more than cooling their heels before an assault on the highs later, the OctÂ and Dec LC charts suggest a test of Mondayâ€™s lows and a possible look at bothÂ the 50% retracement area and the 40-day moving averages, 200 to 300 pointsÂ lower.
To create that kind of downwardÂ momentum, cash fed cattle will need to trade lower this week. So far, veryÂ little packer inquiry can be found around, though bids of $155-56 south andÂ $245 dressed north supposedly have been made. And triple digit futures lossesÂ this morning certainly will aid the packer in his full-court-press to lower hisÂ raw material cost.
The bearish news is abundant in theÂ form of a weaker boxed beef cutout, red packer margins and packers owning moreÂ inventory than for quite some time. Â AndÂ bullish news is absent, at least today.
In fact, the Choice cutout, atÂ $245.91 yesterday, took out the recent low made earlier this month and is nowÂ the lowest since, June 26. The loin primal is the weakest link of the carcassÂ right now, dropping to a level not seen since last March and while beef 50s theÂ lowest since April. Neither loins nor 50s typically bottom until October. AndÂ heavier cattle out-weights translate into a larger supply of beef 50s, sinceÂ thatâ€™s where about 14% of a carcass ends up.
Â Â Â Â Â OIÂ Up on Up Day
One thing worth noting is theÂ increase in open interest in Live Cattle futures on yesterdayâ€™s rally, upÂ almost 5k contracts in most active Dec. We wonâ€™t know for a while which marketÂ participants were responsible, but if last Fridayâ€™s Commitment of Tradersâ€™Â report was any indication, itâ€™s likely we saw commercials adding to shorts onÂ the rally.
Â Â Â Â Â Â COFÂ Report Tomorrow
As the marketplace looks for cluesÂ as to whatâ€™s next in a market that seems to give and take in extreme fashion,Â tomorrowâ€™s USDA Cattle-on-Feed report isnâ€™t really expected to tell us anythingÂ we donâ€™t already know. The industry continues to place fewer cattle than a yearÂ ago and market fewer as well. There was one less marketing day in August thanÂ in August 2013, which automatically lops 5% off the marketings on a percentageÂ basis. Average analysts estimates are: COF 99.1%; Placed 96%; Marketed 91.4%.The Beef isÂ published by Consolidated Beef Producers…for more infoÂ click here. Disclaimer: Â The Beef/CBP shall not be liable for decisions or actions taken based on the data/information/opinions.