By Cassie Fish, http://cassandrafish.com
Over the weekend, a major cyber attack on the global protein company JBS brought the company’s slaughter and fabrication operations to a halt. This shocking and unfortunate event has sent shock waves throughout the meat packing, cattle, and end user communities. There is hope, but no word, that the issue will be resolved quickly and plants will be running again as early as tomorrow.
CME cattle futures, today with their new 500-point limit for live cattle and 625-point limit for feeder cattle, plummeted early on the news but have clawed back some of the gains. Spot June LC has had a 337 point range, most active August LC a 317 point range.
Futures gapped lower, spot June bouncing off the spot low for 2021 of $111.35. When cattle futures make a new low for the year in June, that is typically bearish and so far, it has held. December LC on back are higher on the day as long-term bulls stepped in to buy the market in the mid to upper $120s- still optimistic better days await.
Truth be told though, last week’s pitifully small slaughter for May of 629k head proves this industry is incapable of getting an adequate number of cattle harvested consistently. The 669k head two weeks ago just made up for that week’s prior couple of weeks light kills—639k and 640k. Last week’s 629k was unacceptably light.
Now this week’s slaughter will fall short, leaving only 3 full weeks in June to make progress before the July 4th weekend limits the slaughter the end of June and first week in July if packers give workers July 3 off- which is likely.
It would be one thing if the industry had been able to become more current, but carcass weight data, grading data and days on feed of cattle in feedyards all prove that the front-end is not cleaned up overall and furthermore, will remained challenged.
This current event at JBS is another reminder that limited throughput at fed cattle beef plants is a systemic vulnerability for everyone associated with the cattle or beef business.
Copyright © 2021 the Beef Read. All rights reserved
The Beef is published by Consolidated Beef Producers
Use of part or all of this blog for any reason without permission is strictly prohibited.
Disclaimer: The Beef, CBP, Cassie Fish nor NFC Frontier Capital Markets shall not be liable for decisions or actions taken based on the data/information/opinions.
This material has been prepared by a sales or trading employee or agent of New Frontier Capital Markets and is, or is in the nature of, a solicitation. This material is not a research report prepared by New Frontier Capital Markets. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that New Frontier Capital Markets believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.