Solid Fundamentals for July

By Cassie Fish,

Last week’s large F.I. estimated cattle slaughter of 677k head was big and impressive. Applying a 22% non-fed slaughter, that leaves fed slaughter north of 520k head, big for July. The quicker packers move through the abundant fed cattle supply of July and August then front-end currentness will be maintained as the industry hits the tight Q4 supply.

On top of that, USDA choice boxed beef prices traded $1.58 higher this morning posting at $270.49, within $2 of the spring high. This on the heels of a big slaughter and in the middle of the ‘dog days of summer’ can only mean clearance to the consumer is brisk.

Both of these factors ought to be supportive of fed cattle prices which has experienced some seasonal weakness the past couple of weeks coming off the high for the year. Last week’s average was $2 lower, the national live price for steers $142.30. Cattle feeders continue to give the packer the advantage by selling cattle with time and last week sold 25k head that way out of 85k head total.

The takeaway here is that packer margins are once again inching outwards a bit as better-than-expected beef demand buoys boxes.

CME live cattle futures are experiencing overall liquidation as total OI eroded to 266k contracts open as of Friday’s close. Perhaps some funds are heading to the sidelines anticipating the well-advertised and highly anticipated recession. Prices are swinging in a well-worn trading range. Last April’s big gaps in August and October LC loom overhead like an invitation.

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: