Half Hearted

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.

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