Time to Go Down

By Cassie Fish, http://cassandrafish.com 

CME cattle futures did rally early, a turnaround Tuesday type of dance before plummeting to the lowest price level since the week of June 10. Apparently the sharply lower choice cutout price reported at mid-morning triggered some algorithmic sell orders and down futures went in a hurry. How big of a hurry? How about 387 points in 10 minutes? Sound nuts? That’s because it is nuts, but that is modern commodity trading for you.

Yes, boxes are finally breaking, the rib taking a big hit, the choice down $4.87/cwt at $325.60. There are few, if any, that don’t already know that the seasonal for wholesale beef values, especially middles, is very weak in July—even with two most recent, consecutive slaughter weeks being the smallest since 2016 for that timeframe.

With futures and the cutout breaking, all eyes are on the cash market. Last week’s packer buy was on the light side so some are calling cash steady this week and others higher. But with today’s theatrics, perhaps steady at best is a more likely call.

LC futures open interest too is falling after reach a new high for 2024. With the Goldman roll underway, spot August lost 10k contracts and the net loss was 1.1k contracts. Also, the CFTC Commitment of Trader’s report released yesterday afternoon confirmed a sizeable increase in managed fund longs and an even bigger decline in commercial positions, mostly shorts but also longs. This type of activity usually indicates a market top or turn and give the market’s behavior this week, that seems to be the case.

Futures bottom pickers are hard to find today—despite the market’s discount to cash– because of the growing believe that cutout values will continue in a downtrend at least in the short term coupled with expectation that cash cattle prices will weaken too.  It’s been a heckava rally, topping uncharacteristically in July, but top it has for now. Whether this is the major top or not ignites strong debate but those with experience can’t help but consider the possibility.

Copyright © 2024 the Beef Read. All rights reserved

The Beef is published by Consolidated Beef Producers

Use of part or all of this blog for any reason without permission is strictly prohibited.  

Disclaimer:  The Beef, CBP, Cassie Fish nor NFC Frontier Capital Markets shall not be liable for decisions or actions taken based on the data/information/opinions. 

This material has been prepared by a sales or trading employee or agent of New Frontier Capital Markets and is, or is in the nature of, a solicitation. This material is not a research report prepared by New Frontier Capital Markets. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW.  PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS.  TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that New Frontier Capital Markets believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.


Please follow and like us: