By Cassie Fish, http://cassandrafish.com
Limit up. Limit down. Limit up. Limit down. Each day is a new opportunity to slam the futures market one way, then the other. CME cattle futures have not taken out the March low, but the drama makes it feel like it has. Futures ping pong back and forth depending on the latest headlines. Today futures are buried by bearish macro news of the spreading coronavirus that is predicted by experts to peak this month and nothing else.
Negotiated cash cattle prices are whipsawing too. Three weeks ago trading at $105, then $110, then $112, with a 5-area average of $108.84 which marked the low. Last week, $119 to $120 cash traded. This week at today’s FCE on-line auction 6 loads trade at $111.50 to $113. Unconfirmed rumors ran rampant this morning that some packers might floor cash or forward contracts at $110 for April.
Packers have purchased a large number of cattle the past three weeks, many with time and at this point, it appears this week’s trade volume will be light.
Boxed beef prices are doing their part as the dramatic rally that began March 16 is being followed by an anticipated significant break, choice now $22 off its high made a week ago yesterday. The choice cutout is still above the spring high of 2019 or 2018. All primals declined, but there is some interest perking up for middles, which is seasonal.
Today’s ad saw Kroger return to beef, with chuck roast and sirloin steaks back in ads and above the fold.
Last week’s F.I. kill was 676k head, historically large and above all analysts forecast for any week in March or April. This week’s estimate has dropped to 655k to 670k. A 655k kill would tie for the fourth largest kill in history for this week. Some tiny to small plants have closed. Some larger plants are experiencing labor issues that have been reported in local papers or mentioned in the local towns.
Generally packers are working with labor, making allowances for employees with children home from school, giving raises, bonuses. But not all packers are handling the challenges the same and some slaughter disruptions are occurring. This is creating fear among cattle feeders.
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