By Cassie Fish, http://cassandrafish.com
For the fourth week in a row, the negotiated fed cattle trade has come in the 125k-130k head range and the price range of $110.61 to $110.95. Granted, last week’s price and volume was a little higher than the prior 3 weeks, but not enough to alter the consistent sideways pattern.
One thing did change though, and that was the total committed number to the packer decline. This indicates that even with a bigger buy last week, the packer burned inventory leaving his net position smaller. The takeaway here is an even bigger buy will be needed soon to shore up total inventory, as the number of formulas and forward contracts drop. This will be supportive of cash cattle prices if not this week, next.
Feedyards needing pen space has contributed a great deal to their willingness to sell cattle, giving some advantage to the packer, but also supporting front-end currentness. Now mud will be an additional motivator as heavy rains hit some cattle feeding areas.
Last week’s slaughter of 643k head was larger than expected and this week’s kill is expected to be a repeat- as some plant maintenance continues. Boxes continue to trek sideways too, exhibiting sluggishness. One of the factors limiting the boxed beef cutout value upside is the fact that both production and price are above a year ago.
CME cattle futures sold off early and though still lower, have recovered somewhat. This very slow-motion technical correction continues amidst a lack of new news. The market caught between today’s lethargy and expectation’s of seasonal price improvement.