By Cassie Fish, http://cassandrafish.com
CME cattle futures response to friendly USDA Cattle-on-Feed report was to open higher and hold gains. Futures still have significant overhead technical resistance to overcome, but today’s action is positive and heartening for bulls. It’s well known placements were below expectations, after months of the opposite result.
The report also bolsters the bold negotiated cash cattle sellers strategy late last week- which was to carry cattle priced at $112 or higher into this week, rather cave in to packer bids at $111 to $111.50. There are rumors of $111.50 bids surfacing today.
While sellers in Texas, Kansas and a couple of other big negotiated cattle traders passed, the north saw huge transfer of cattle ownership from feeder to packer. Iowa traded a whopping 43k and Nebraska 40k, not counting negotiated grid cattle. The total, national negotiated trade volume for last week was 112k, up 8k from the prior week and the packer also stopped the slide in his total committed total. This week’s showlist saw a very small net increase.
Last week’s slaughter finally saw a meaningful drop, 625k total, the smallest non-holiday slaughter since the week ended April 14 this year. The cutout gained $5 last week and is expected to increase $3 this week, on it’s way to $215 or higher in late November. The rib alone gained over $14 last week. This week’s slaughter is estimated in a very broad range of 620k to 638k head. With packer margins expanding, expect 630k or higher.
Seasonally, cash cattle prices trade higher if not this week, certainly by next. There seems to be good odds cash will be a couple of bucks higher this week, though packers will do their best to minimize the jump in value.