By Cassie Fish, http://cassandrafish.com
It’s a quiet grinder as CME cattle futures work higher today following a couple of down days. Dec LC is back above its 10-day moving average and the market is in the middle of its trading range.
The theme of the last few weeks has been the same. Futures sideways, cash higher and the cutout lower. The result is basis has narrowed, which inspired the basis-centric cash traders to actually sell a few cattle at steady money today, despite the fact that packer competition this week is significant as packers seek to replenish inventory. Cash will still end up trading higher as packers compete to fill needs.
Cattle inventory gets burned up fast with a kill pace this big in December. Even the week ended November 23, the industry slaughtered 521k fed cattle. With the Finney County Tyson Fresh Meats plant now running, this week’s fed kill could push above 530k head. Non-fed kill is running high too, that same week in November it was 22%. If slaughter is over 670,000 head and with cattle weighing what they do, this could be a record weekly production for the first full week of December.
So it goes. Full feedyards continue to keep cattle feeders in the selling mode. Great demand and record profits keep packers running hard. Futures, priced where the market traded Q1 of this year, are trading sideways with year-end giving plenty of reasons to bank profits if long or add to shorts if a short hedger.
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