November 2023

By Cassie Fish, http://cassandrafish.com

CME cattle futures are down hard again today after an earlier week reprieve. Futures failed at the 10-day moving average, turned tail and collapsed. The segment of the categories of traders involved in live cattle futures that usually carries the most longs are managed funds. When managed funds liquidate massively, it presses the market harshly. Other years that stand out: 2009, 2013, 2018, 2019, 2020 (net short). As of the close the November 21, funds were net long only 39k contracts, a new low for the year. Their net position in September, the month the market topped was 119,337 long. There will be no updates until tomorrow afternoon as to where this critical data stands of November 28 but expectations are for net long managed fund positions to decline yet again.  

A look at total open interest for cattle futures this morning shows a sinking ship, OI down 13k in three days this week. OI totaled 269k contracts this morning, a new low for 2023 and 19k above the low for 2022. Today’s purge feels like more of the same, managed funds reducing longs even more. And who is there to ‘take them on’? No one. Individual traders are wise and won’t step in front of this debacle. Cattle feeders are reluctant to reduce their hedge percentage. So even after a 3.5 standard deviation decline and every contract discount to cash except red December—this market has no friends.

Of course the futures break benefits the packer and cash prices have traded lower each week. There was a tiny bit of $275 this morning in Nebraska, the one state that has kept their hands in their pockets this week. A bid with time of $173 was rumored in Nebraska also. Week-to-date trade total this morning is a pitiful 26k head.  

Boxed beef prices recovered this morning, choice up $0.92 on a strong rib and select jumping $3.20 though the spread is still a wide $30.66. Tis the season.  The packer is edging back into black ink this week. Still looking for a better harvest this week— 635k or higher.

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