Correction Time

By Cassie Fish,

CME live cattle futures have followed through to the downside today and a correction is finally underway. After finally filling the November 4th gap yesterday, April LC’s low is 182 points off of yesterday’s high. The excitement over placement estimates for the February 23 USDA Cattle-on-Feed report is waning and expectations for ‘just steady’ cash fed cattle prices this week after +$3 gains last week find the futures market short on new good news and technically overbought.

Packers have cut kills for this week, estimates of a 605k weekly harvest are common and more reduced slaughter is expected for the foreseeable future. Smaller kills soften the down in boxed beef values — packers hope — and preserve cattle to harvest later. This is the packers primary margin management tool for a year like 2024 and is expected to be wielded often.  

Also to be expected, choice boxed beef values are leaking lower, down 0.83/cwt this morning as the choice/select spread keeps narrowing – now $6.30/cwt. This despite a higher number of select cattle in the mix. This is also not unheard of since retail beef prices are record high and middle meats are nose bleed high, cheaper end cuts, likely some hitting the grinder, are holding things together.  

No surprise there has been no cash trade this week to speak of nor is there likely to be until late week. Futures are closed next Monday and that following Friday the much-anticipated bullish COF report will be released, so that makes this week a bit of ‘breath out’ after the excitement of last week.

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