Bumping

By Cassie Fish, http://cassandrafish.com

CME feeder cattle futures have spent most the day in the red despite a bullishly construed cattle inventory report. In fact, feeders haven’t acted good since topping in early January and continue to struggle, losing to live cattle futures. A short soybean crop in South America has lit a fire under U.S. soybean values and there will be a fight for acres in between corn and beans this spring. Though corn looked perilously toppy yesterday, it has come barreling back today leaving feeders leaking red.

Also, the USDA revised the 2020 calf crop upwards 360,000 head, and the entire cattle population as of January 1, 2021 upwards 195,000. So our ‘less than’ numbers for January 2022 are less than more than the industry knew they had. The beef cowherd is in liquidation a liquidation phase, accelerated by the drought, with Montana, the hardest hit state seeing the biggest drop in numbers. Kansas and Nebraska saw a 20k head increase in heifer retention, so reducing the cowherd is not universal.

CME live cattle futures are testing big overhead technical resistance today, back at the top side of the long-lived trading range with spot February LC just under it’s 2022 high of $140.40, which was the high of a weekly reversal lower the first week of January.  As the day has progressed, the market appears to be gaining momentum. Spot highs from 2015 and 2016 loom overhead for spot February also—$142.10 and $141.90 respectively. Most active April LC is higher too but losing on the spreads to all other contract months. February’s contract high is $141.84 made in November.

There has been some very light cash trade this morning at $137 to $139 and a $220 dressed bid from a regional packer just surfaced, $2 higher dressed than a week ago. Cattle feeders are pricing cattle higher and if there was a week to see prices advance, it would be this one given the optimism swelling in almost all commentary.

Seasonally an advance ought to be imminent and the cash market strong over the next 4-6 weeks. It will be up to the packers to balance supply, demand, and throughput. Packer margins will likely contract but remain solidly profitable.

Yesterday’s USDA Comprehensive Boxed Beef report showed an improvement in volume and a noticeable increase in export sales.

copyright © 2022 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.

  

Please follow and like us: