And They All Come Down

By Cassie Fish, 

The correction has begun with choice cutout values, cattle futures and cash fed cattle prices all turning lower this week. Futures have dropped over 700 points since last Friday’s high. Cutout losses are close to $5/cwt and Texas and Kansas traded cattle $2/cwt lower at $188.

Today’s futures break was mostly an inside day with a lower close following two rugged down days. Lead month August LC closing today $15/cwt discount to the last week’s cash, which reached an all-time high. But given that managed funds have increased in long ownership the last few weeks, the market’s weakness generates liquidation. This week of the Goldman roll finds open interest coming down quickly from its annual high so far, made uncharacteristically in July.

The northern cattle feeders will not be as quick to sell cheaper as the south and a steady bid was just made in western Nebraska that has generated some steady trade at $198. But regardless, the momentum is lower after seven consecutive weeks of higher cash prices.

This week’s slaughter, after a bobble on Monday, has recouped and the week-to-date total is 354,000 head, up 1k head from a week ago. Estimates for the week range from 605k to 615k.

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