A Dose of Higher with a Dash of Caution

By Cassie Fish, CassandraFish.com

Green again this morning, CME cattle futures have yet to rally with the power of the not-yet-forgotten break earlier this week. Today’s plodding rally in LC futures has market watchers still wondering if this rally is for real and can the bottom be trusted. Fats and feeders have managed to take out the earlier week highs and get into the gap, but are no house afire as of yet.

A close above $143.45 in Oct LC would be good, above $144 really good.

         Goodbye August, Hello September

After an emotionally draining week, many traders are eyeing the clock and the calendar marking the last week in August.BOW Ad 05-2015 Next week will bring in a new month, the final of the third quarter and a new lead option as Aug LC expires Monday very likely at the lowest level since May 2014. A fitting finale to a summer cattle market rife with disappointment and red ink for cattle feeders.

Packers on the other hand are beginning the final leg of what will end up being their most profitable quarter of 2015 and they will hold on to the black as long as they possibly can before the tide turns for the final quarter of the year, one that is red the majority of the time for that segment of the industry.

When boxed beef prices fell to the lowest levels of the year this summer there was hope retailers might come in and feature beef, lowering prices. Instead, government data just released shows retail beef prices down only slightly from the June all-time record high as that segment of the industry continued to ring the register selling less product for more money.

2015-08-28_chart1

With no help moving more product at home and exports continuing to lag, shipments down 11% YTD, and imports continuing limit the end cuts and select values in general, it’s actually impressive product values have held up as well as they have.

         Cash Still to Trade for the Week

There has been very limited Corn Belt trade trickle in from $224-227 as packers pick off smaller producers. In Kansas and Texas this morning, a major packer is bidding $145 and being passed. Cash trade there will likely develop at a higher level than $145 buoyed by the strength in futures and the widespread knowledge that market-ready fed cattle supplies are tight everywhere but eastern half of Nebraska and Iowa and even in those states, supplies will begin to drop significantly in 3-4 weeks- big cattle or no. This week’s kill is expected to be up 4-6k at 544k-546k, from the last two weeks as packers make the most of their opportunity, a positive development.

Copyright © 2015 The Beef Read. All rights reserved.
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Disclaimer:  The Beef, CBP nor Cassie Fish shall not be liable for decisions or actions taken based on the data/information/opinions.
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