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The market appears overbought and vulnerable to a significant set-back if there is not progress on poultry exports to Russia and China soon as poultry could start to clog the pipeline. Traders have shrugged off talk of poor retail and restaurant demand on the East Coast and also talk of building poultry inventories in the US due to trade disputes. As a result, any new news to end the Russian dispute with US poultry is not likely to provide much support. There has been some progress this week and Russian agencies have invited the US to send a delegation to Moscow as soon as they like to begin a second round of talks. April cattle closed unchanged on the session yesterday after choppy and two-sided trade. The market managed an early rally to the highest level since June 12th before drifting lower on the session. While the weather has disrupted supply and could cause lower than expected production in the weeks ahead, traders are getting more nervous over potential slower demand due to storms and higher alternative meat supply and these demand factors may have limited the buying support. Average dressed steer weights for the week ending January 30th came in at 836 pounds as compared with 855 pounds last year. Beef production for the same week came in at 485.5 million pounds, down 2.4% over year ago. Slaughter that same week was down just.3% so we can see the significant impact on production in years in which weights are lower. Traders see a further drop in weights for the first two weeks of February which may help provide some underlying support due to the tighter supply. Weights typically fall sharply in March and remain in a downtrend into May. However, demand is a growing concern for the market and traders will continue to monitor the beef market for clues on demand. Boxed beef cutout values were up 43 cents at mid-session yesterday and closed 40 cents higher at $139.17. This was up from $138.71 a week ago. Prices have remained mostly steady in a period of declining supply in the last month. The estimated cattle slaughter came in at 121,000 head yesterday. This brings the total for the week so far to 481,000 head, down from 489,000 last week at this time and down from 498,000 a year ago.
TODAY’S GUIDANCE: Watch for a technical sign of a near-term top. April cattle still has an upside objective of 92.40 but closed poorly yesterday and traditional technical indicators are at overbought readings. There is some resistance at 91.60 with 90.60 and 90.20 as support.
Cattle Market Commentary – 2010.02.12
by Terry Roggensack on February 12, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
The market appears overbought and vulnerable to a significant set-back if there is not progress on poultry exports to Russia and China soon as poultry could start to clog the pipeline. Traders have shrugged off talk of poor retail and restaurant demand on the East Coast and also talk of building poultry inventories in the US due to trade disputes. As a result, any new news to end the Russian dispute with US poultry is not likely to provide much support. There has been some progress this week and Russian agencies have invited the US to send a delegation to Moscow as soon as they like to begin a second round of talks. April cattle closed unchanged on the session yesterday after choppy and two-sided trade. The market managed an early rally to the highest level since June 12th before drifting lower on the session. While the weather has disrupted supply and could cause lower than expected production in the weeks ahead, traders are getting more nervous over potential slower demand due to storms and higher alternative meat supply and these demand factors may have limited the buying support. Average dressed steer weights for the week ending January 30th came in at 836 pounds as compared with 855 pounds last year. Beef production for the same week came in at 485.5 million pounds, down 2.4% over year ago. Slaughter that same week was down just.3% so we can see the significant impact on production in years in which weights are lower. Traders see a further drop in weights for the first two weeks of February which may help provide some underlying support due to the tighter supply. Weights typically fall sharply in March and remain in a downtrend into May. However, demand is a growing concern for the market and traders will continue to monitor the beef market for clues on demand. Boxed beef cutout values were up 43 cents at mid-session yesterday and closed 40 cents higher at $139.17. This was up from $138.71 a week ago. Prices have remained mostly steady in a period of declining supply in the last month. The estimated cattle slaughter came in at 121,000 head yesterday. This brings the total for the week so far to 481,000 head, down from 489,000 last week at this time and down from 498,000 a year ago.
TODAY’S GUIDANCE: Watch for a technical sign of a near-term top. April cattle still has an upside objective of 92.40 but closed poorly yesterday and traditional technical indicators are at overbought readings. There is some resistance at 91.60 with 90.60 and 90.20 as support.
Tags: Cattle, Livestock
About Terry Roggensack