By Cassie Fish, http://cassandrafish.com
CME cattle futures have made it clear with today’s decisive action that the fall rally is underway. First the market shook of the bearish Cattle-on-Feed report. Then the record weekly export beef sales were noted in yesterday’s USDA Weekly Comprehensive Boxed Beef report tipped the balance to the bulls. The earlier than normal bottom in boxed beef values hasn’t hurt either as the markets looks to the next 2 months as its best chance to advance, finally shaking off the negative impact of the COVID-19 disruptions.
There is a very long lag in the reporting of weekly exports to when the USDA rolls them up in the official monthly report which shows destinations, so little is known about the sale other than it will ship beyond the spot window between late October and late December.
Expectations now are that cash will trade $1 to $2 higher live this week compared to last week’s $105 and $2 to $3 higher dressed. Two major packers in the north own inventory with time but are still expected to continue to participate to keep cattle around them. The high of the cash rally in August was $107 live and the average was $106.59, the highest since June.
Boxed beef prices typically increase from early October until early December and a retest of $230 area for choice that was reached in August is expected.
Technically Oct LC has taken out the Aug LC spot high and is the highest of any spot month since the third week of March, when Apr LC rallied to $110.65. Beyond that $112.65 was the March spot high. And the gap left by the Oct LC contract last February is $111.75 to $112.42.
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