Quietly Higher Futures; Solid Fundamentals

By Cassie Fish, http://cassandrafish.com

CME cattle futures are quietly higher as they continue their consistent, going-nowhere-fast choppy trading range. October LC expired Friday higher than any spot expiration since February 2019. But because futures are carrying premiums to cash and the basis is narrowing as cash strengthens, futures are content to chop. Most active December LC will feature pre-roll this week while the Goldman roll begins Friday and open interest will migrate to the February LC.

There was significant positive fundamental news last week first in the slaughter level, which totaled 668k head and included the best Monday through Friday throughput in ages. This week’s slaughter is estimated at 660k head, give or take.

Next, last week’s negotiated fed cattle trade totaled 104k head, the second highest total of 2021 and only 11k were bought with time. Reports of improved front-end clean up are noted in lots of spots. The average price last week topped $126 for the first time since April 2019.

Boxed beef values seasonally bottomed two weeks ago and are advancing. At the same time last week saw record beef production- a testament to record beef demand both domestic and globally. The choice/select spread bottomed last week seasonally as the choice rib makes it holiday run, also having bottomed two weeks ago. Packer margins continue at a record pace.


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