Bottomless

By Cassie Fish, http://cassandrafish.com

Right now, CME cattle futures have a bottomless feel. Charts look awful. The October 2024 contract and beyond have made new lows for 2024, as optimism drains away. Unfortunately, this type of action has become a new normal in CME cattle futures, as funds, and day-trading algos pound the market into the dust. The cattle industry is frustrated, shell shocked but anyone who has been around in recent years knows this is a recurring part of reality.

It is a sell first and maybe remember to ask questions later mentality—not based in facts but in fear and uncertainty. And once the market is under siege, no one is big enough to stand in its way, regardless as to whether the market break makes a lick of sense.

Two days have seen CME live cattle futures volume surge over 100k contracts per day, evidence of increased computerized trading and likely panic maneuvering. The CME economic model is volume based.  

After making a new low for the move today, futures are once again staging an intra-day rally, and each time they do, hopes rise that maybe the funds are finally done selling. On today’s low, spot April LC was $8.47 discount to last week’s cash fed cattle price. This week, cash is expected to trade lower, but not that much lower.

A few cattle have traded this week, USDA shows 2.3k WTD. Yesterday 642 steers sold for an average of $185.06 and 497 steers dressed at $298.11.

Boxed beef values have traded lower so far this week, despite slaughter reductions week after week. This morning, choice printed at $302.51, down $1.65, a new low for the move. The choice/select spread is still under $5, typical seasonally.

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