The Cattle Range Home Page
December 20, 2017
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Fed Cattle Market...
More $120 Trade; Futures Melt

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Fed Cattle Market... More $120 Trade; Futures Melt
Cassie Fish -- cassandrafish.com

A few more cattle have traded in the north at $120 this morning, so cash is no worse than steady this week. It remains to be seen how full packers will get this week and even whether there are enough cattle to go around in all areas. Packer needs for cattle will be even greater next week to fill plans for larger kills, and all will be watching this Fridayís Cattle-on-Feed report to see if it is bearish enough to stem the tide of rising cash cattle prices into the new year.

Steady cash trade is occurring despite eroding CME cattle futures, which have been led by lower feeder cattle futures, plagued by what appears as fund liquidation which begin in earnest yesterday. For feeders, the distance between the index and futures has done nothing but widen all week, as the feeder index holds above $150.

Report Worry Generates Selling

Worry over the bearish potential of Fridayís USDA Cattle-on-Feed report seems to be increasing and generating selling in Jun, Aug and Oct LC. Placements are expected to be up 5-6% YOY. All these contract months have followed feeders and taken out last weekís low, posting an outside week and turning technical indicators lower once more. The difference between a Dec LC chart and a summer cattle chart is truly night and day, with Dec holding the $119 to $120 area, where the Dec LC 2016 expired a year ago.

Funds Sell Another Round

Todayís bearish futures action may cause alarm for some. Itís a reminder that although funds had liquidated a great deal, the end of the quarter and year is stimulating yet another round.

And climbing a wall of worry maybe the healthiest way for the market to approach 2018. It will insure aggressive fed cattle marketings and the currentness gained this fall will be maintained and even furthered. Itís a long time until the summer low of 2018 even though todayís futures market action would have folks convinced lower prices are imminent.

End Meats Advance

As is the season, ground beef, chuck and round items are on the rise this week, offsetting the big rib loss. The rib primal is $56.81 lower than itís high in early December, which is normal seasonally. The cutout wonít start to print higher in any meaningful way until next week, before it picks up steam for more up in January.

Beef features for the Christmas holiday are widespread and well-priced and movement is expected to be solid as it was last year.

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