By Cassie Fish, http://cassandrafish.com
This year has been one to exceed expectations. The powerful rally in CME cattle futures has exceeded even bulls hopes while putting heat on bears. On one hand, spring cattle futures in the mid $120s provides a good short hedging opportunity. While on the other hand, it creates a certain level of anxiety as many wonder, just how high managed fund money might push this market.
In the cash market, the rally has been contained and modest, moving from $104 to $112 with $115 to $117 in the coming weeks no longer seeming like a stretch. Yesterday’s actual carcass weight data, showing steer weights at 896 pounds, 19 pounds under a year ago, confirmed front-end currentness- the key element boosting cash prices. The other key component is demand all year and currently for high quality middles for the holiday season.
This week’s cash trade will take place today, likely this afternoon, likely at $113 to $114 live and $180 dressed. Kills the first two weeks of November are expected to exceed this week’s 620k, motivated by the desire to produce product to ship in the coveted early days after Thanksgiving. High-end holiday entertaining, in and away from home, includes the best of things, meaning prime cuts of beef.
Today’s pull-back in futures is minor considering the huge gains for the week. Most active Dec LC is $5 higher than last Friday’s close and the highest since June. All the 2018 contracts made life-of-contract highs- again. And open interest piled on all week, up 16,500 contracts and totaling 344,626 contracts.
Indeed, this market continues to exceed expectations in multiple ways.