By Cassie Fish, http://cassandrafish.com
It took until Friday afternoon before the negotiated fed cattle trade got fully underway and it turns out, it was huge. Over 148k head traded, 18k with time, as packers took another big bite, paying mostly $1 to $2 higher, from $112 to $113, with a little $114. For whatever reason while it was taking place the trade didn’t feel like it was that big, so this news is a surprise to many. And, the big trade volume in all states but Texas, also explains the large drop in this week’s showlist in Kansas, Nebraska and Colorado.
Packers had also dialed last week’s slaughter level back a bit to 635k and this week is estimated at 635k to 640k. Slightly smaller kills coupled with at big transfer of ownership to the packer ought to result in this week’s cash cattle prices being steady at best, though the pressure is also off of the feeder as a seller.
At the same time, boxed beef prices, which last week averaged $204.32, a new weekly low- are showing signs of bottoming. This morning choice boxes posted $1.10 at $205.27 and talk is beginning to circulate that the seasonal low is either in or near. With August 1 next Wednesday, a low in boxes is due any time. When boxes start to seasonally move higher in August, packers may feel inspired to add a little kill back in, which would be price supportive for cash cattle.
CME cattle futures have traded both sides today and technically are modestly overbought. Aug and Oct LC are still discount to last week’s cash price, would seem to have limited downside and may just trade sideways to lower as they have the last three days, in order to correct. The bull spreads have also corrected today, perhaps boosted by some late roll.
Rumored rumblings that talks between Mexico and the U.S. on trade may resume in August boosted beleaguered lean hog futures today and gave some hope that progress with this close trading partner is a real possibility.
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