Improving

By Cassie Fish, http://cassandrafish.com

Given last week’s solid slaughter at 657k head and another good, negotiated cash cattle trade volume, there is optimism cash prices will trade higher this week. Last week’s volume totaled 85k head, 77k in the 1-14 day delivery window as cattle sold with time decline. This week’s slaughter is estimated between 640k and 650k head as a couple of plants clean coolers.

At the same time boxed beef values continue to correct, the over-valued middle meats taking the big and much-needed hit while grinding material continues to be in strong demand. Choice posted at $283 this morning compared to the summer low of $264.

CME cattle futures are digesting this information with a very quiet, choppy trade. There was some good news to be found in last Friday’s close, as spot October LC posted the highest weekly spot close of any cattle contract since January 2020. So even though it doesn’t ‘feel’ like it the market has found a way to retrace the 2020 enormous decline. It’s just taken a long time.

Another factor limiting cattle futures is cattle contracts are not finding fund long participation. As of Friday, OI sank to the lows of 2021, unusual for October. The last Commitment of Traders report showed funds very modestly increased shorts as of last Tuesday. But Friday’s daily report, with sinking OI tells a story that funds may have blown a few shorts but aren’t showing any interest in the long side after being burned on the false break out in August.

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