By Cassie Fish, http://cassandrafish.com
Today’s rally in CME cattle futures started out strong but has waned significantly as they day has worn on, with red ink now trading. Most active December LC failed to take out Friday’s high before taking out Friday’s low to sag back to the 40-day moving average.
The news this morning is as expected. Big negotiated fed cattle trade volume occurred last week, 96k head which included 18k with time. That volume was larger than the prior week and the biggest since June. Packers are intent on keeping inventory around them to avoid having to chase the market due to being short bought. Cash prices ended about $1.40 higher the prior week and the highest in three weeks. Cash fed cattle prices are just a little more than $4 short of the all-time high in June.
Last week’s harvest of 617k head was smaller than expected as packers run 32s at some plants to keep red ink from worsening and attempting to shore up sloppy boxed beef prices. Small kills mean the slowed marketing pace of the last 6 months continues.
Boxed beef prices did print higher this morning, choice up $1.39 at $302.19, the market thus far unable to put much distance between it and the $300 area. The latest drag on boxes have been grinds, beef 50s nosediving to new lows for 2022, back to a level not seen for a year. Beef 50s have lost more than half of their value this year. Beef 90s have dropped hard for 5 consecutive weeks, down $26/cwt from its highs. Apparently hamburger prices have reached a point of demand destruction. Middle meats last week continued to struggle, unable to enter a sustained uptrend.
There is a USDA Cattle-on-Feed report due out Friday that may have a bearish cast. One less harvest day means a really low marketing number since the marketing pace has been slowed for months anyway. Then there are expected to larger placements than though possible, given tight feeder supplies. The combination will be almost as many cattle on feed October 1 as the last couple of years and just 200k head short of the peak in 2019.
Copyright © 2023 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.