Cattle Market... Consolidation
Cassie Fish --
week, CME cattle futures made life-of-contract high after a two-week run
up. Such a move placed futures in an over-extended state technically and
so far, this week, the market has seen fit to take a rest and consolidate.
In fact, this is the best technical correction since mid-October. The fund
roll also continues to dampen advances in the Dec LC and by week’s end,
Feb LC will carry the most open interest as Dec LC takes the back seat.
the country, a few bids have already surfaced, Corn Belt packers floating
$190, $1.50 under last week’s average and well below the $198 outside top.
While in the Plains, one major bid $124 in Colorado, $1 under last week’s
practical top. CME cattle futures seem oblivious to the stirrings in the
country however, at least for now. Cash looks to be steady at worst and
$1-2 higher likely.
trades, wary of a top, are troubled by the basis convergence of futures
and cash. But a rally like this- and plenty of time left on the holiday
clock- makes a bang not a whimper more likely for the culmination of this
move. Cash is known to outrun futures by considerable amounts historically
before topping. Further, cash just took out major overhead resistance last
week and little resistance exists on the cash chart until the $130 area.
is a rumored cooler cleaning this week as well as a couple of Saturday
shifts that have been pulled which ought to bring this week’s slaughter
down to 628k to 632k. Boxed beef prices will benefit by the kill cuts and
are expected to move higher over the next 2-3 weeks, with choice approaching
and maybe surpassing $220.
USDA released grading data from the week ended October 28 today, which
included about 2.5 days of slaughter following the recalibration of the
quality grading camera at some fed plants was performed. Compared to the
prior week, choice grade dropped 1.39%, prime grade dropped 0.47% and the
+choice declined 1.9%. Grading is still at or near record all-time highs.