Posted On: 7/19/2016
By Cassie Fish, http://cassandrafish.com
Thus far, CME cattle futures are trading inside last weekâ€™s range. This is keeping bottom pickers hopeful and bears (if you can find any) on edge. The cash news has worsened this week- boxed beef prices have made new lows for 2016- while futures are still higher than last Fridayâ€™s close and 100 to 300 points above last weekâ€™s low. Obviously a basis correction of sorts has occurred.
Boxes are under significant pressure; the ground beef complex a drag along with seasonally weak middles. Last weekâ€™s big production (the kill was revised up to 598k) on top of a 595k to 600k slaughter this week is keeping plenty of beef in the pipeline. Since packers have a head start on a black margin, lower boxes arenâ€™t a problem, as long as they keep replacing cattle inventory cheaper. Of course if the boxed beef decline steepens, that could change.
Support on the choice cutout is $194-196 and on the select, $186, both the lows reached in December 2016 and far below the $202.81 and $192.45 established this morning.
Last week, even though it didnâ€™t feel like it, saw 92,584 of negotiated cattle trade after all and plenty of formula and contracted cattle were turned in to- all resulting in adequate inventory for packers. There have been some bids surface today at â€œwill callâ€ at $187 dressed north, steady with last week, which some would insist is bullish. Instead it could be the best the market will offer this week.
A shot down in the corn and beans today is providing support for feeder cattle futures, despite the fact that Dec, Feb and Jun LC are less than 150 points from their life-of-contract lows. Feeders are once again gaining on fats on the down, another sign that hope a low is near remains alive.