By Cassie Fish, http://cassandrafish.com
The disastrous cash fed cattle market of 2020 is still underway, with cattle prices in Nebraska down another couple of bucks from last week, mostly $165 dressed and $105 live. Packers needs are limited because next week’s Christmas week slaughter schedule will be one of the smallest in history.
Packers have made it almost impossible for cattle feeders in eastern Nebraska and Iowa to clean up showlists and week after week have limited prices or trade volume or both. There are still some bigger cattle around, though nothing like the industry saw in 2015. But great fall feeding weather and months and months of working through the COVID-19-related backlog of market-ready cattle supplies kept all leverage in the hands of the packer. It may take another 3-4 weeks before the north turns the corner on its front-end numbers. Cattle continue to be hauled from Nebraska to Kansas for slaughter.
Boxes have come back to earth, nearly $30 off of their Thanksgiving high and back to support. Next week’s tiny kill will have the opposite impact on wholesale beef prices than on cattle prices and help boxed beef prices cement a low.
Tired of the bearish 2020 news, CME cattle futures have ignited in the last hour, making new highs for this week and taking out last Friday’s high. This Friday’s USDA Cattle-on-Feed report will be bullish with placements down 10-15% on the heels of a sharply lower placements in October. After a year of historic lows, sooner or later futures will do what futures do, anticipate better days. The pervasive litany of bearish news is becoming stale to futures. For the last week, volume and OI increase on rally days and there is little follow through on weakness. Today’s action is building on last week’s positive technical turn and giving credence to better days ahead.
Most active Feb and Apr LC have posted an outside day and are above all moving averages. Aug and Oct LC have made contract highs. Feeder cattle futures are all making new highs for the move. It is a quiet, yet impressive day.
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