By Cassie Fish, http://cassandrafish.com
This week it’s a one way street higher, though rallies rarely pile on as fast as losses add up. No futures contracts have gotten above their 10-day moving averages, nor taken out the last big swing high, but there is no doubt selling has dried up. So far its an inside week and higher on the week.
Even as of a week ago Tuesday’s close, the more recent CFTC Commitment of Traders’ report showed commercial longs, usually packers, buying the market as open interest in that segment rose a little over 6k contracts. The massive sell off did reach ‘value’ in some participants’ eyes and this week’s consistent gains seem to confirm this fact.
And Friday’s much anticipated ‘bearish’ USDA Cattle on Feed report has some traders buying the market in belief, all the bearish news was priced last week.
Negotiated fed cattle trade this week is off to a very slow start, with less 2k head traded, the volume mostly on a dressed basis at $282/cwt. No one expects cash prices to be much lower this week than last week, when prices dropped $5/cwt. Even with Thanksgiving next week and a 625K slaughter this week, packers need to replenish their inventory.
Boxed beef values are bouncing about, yesterday afternoon making a new low for the move only to put on over $2/cwt this morning boosted by an up in the rib. Expect more ‘holiday’ volatility to continue in boxed beef prices as end users buy any weakness for the next several weeks.
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