More Chop

By Cassie Fish, http://cassandrafish.com

It’s the beginning of another week and the end of the third quarter of 2021 this Thursday, and cattle futures continue to chop. CME cattle futures rallied early, then turned red, but really, the market is running time off the clock as open interest dribbles out. There are a variety of factors to talk about, though none of them are significant enough to sway this market big, one way or another.

The CFTC’s Commitment of Trader report released last Friday showed more fund long liquidation and an increase in fund shorts. Commercials continued to be buyers. The net long position in live cattle futures is down to 34k contracts, light for this time of year.

Last Friday’s USDA Cattle-on-Feed report showed placements up more than expected as Kansas and Colorado continue to aggressively make moves to keep yards brimming full. Texas COF is down 150k head from last year at this time, likely due to high cost of gain.

Iowa is down 20k head as it continues to erode in COF big too and does not look to be making a comeback. Non-committed feedyards are having a more difficult time getting cattle harvested as each year passes and the equity commitment to feed cattle has done nothing but grow exponentially. Cattle feeding becomes more of a corporate enterprise with each year that passes.

Boxed beef values are slowly falling, losing $12 on a weekly average for choice last week, $308.76 average compared to $215.87 a year ago.

Friday’s USDA Hog and Pigs report was friendly and December hogs are limit up. Fed cattle supplies will be tighter in December 2021 than one year ago, but the bullish hog news doesn’t seem to be helping the lackluster cattle futures trade at all.

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