By Cassie Fish, http://cassandrafish.com
CME cattle futures obviously arenâ€™t done going down yet as last weekâ€™s lows are revisited and Apr LC makes a new low for the move. Technically the market is very oversold, but another round of long liquidation and maybe some nervous short hedging is pushing the market lower nonetheless.
Â Â Â Â Â Â Â Â Not All Bad
The beef news yesterday was good, despite the board action, with the cutout printing higher and USDAâ€™s Comprehensive cutout report showing excellent exports and good out front sales with prices barely weaker for the week.
Â Â Â Â Â Â Â Â Kill Revised Down
A problem at a plant late last week and another dark plant yesterday resulted in last weekâ€™s kill being cut 7k head, coming in at 540k, down 5k from the prior week, a disappointment. This weekâ€™s slaughter is still expected to be 540k-545k. Thereâ€™s already talk of cooler cleaning at two plants next week in the north as packers get ready for much bigger kills in May and June. Packers continue to do a masterful job of matching throughput to supply and demand and margins, looking at the comprehensive cutout and $3 lower cash last week- are still solidly black.
Â Â Â Â Â Â Â Â Small Negotiated Trade Too
Fed cattle supplies are seasonally snug, though cleanup last week, with only a 61k head negotiated trade, wasnâ€™t great. Packers are expected to use April contracts where they are most needed regionally to fill holes and lessen the need to compete for negotiated inventory.
Â Â Â Â Â Â Â Â Steady?
Still, when this weekâ€™s cards are placed on the table, made up of decent packer margins, a bottomed chuck and round market bolstering the beef cutout- cash prices could just as easily end up steady this week as not. After all, packers likely need to buy a few more cattle this week than last and itâ€™s still another 6-8 weeks or so before fed supplies begin to creep up.
It is hard to put an exact finger on just why the discounted futures market acts as badly as it does given the fundamental outlook for the next few weeks. Nevertheless, some catalyst will come along to justify another rally; perhaps back towards the top of the trading range this market is finding itself in this year.