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The market continues to probe for a near-term low and while outside market forces have turned much more positive on the general demand outlook, the beef market and the cash markets are still showing a weak demand trend. Boxed beef cutout values were down $1.79 at mid-session Friday and closed $1.99 lower at $153.17. This was down from $160.45 the prior week and is the lowest beef market since March 16th. August cattle tried to bounce early in the session on Friday but fell into the middle of the day and then pushed to new lows for the move and to the lowest level since February 8th. News of weak retail sales in the US helped to pressure the market on ideas that the US consumer is backing away from luxury items such as higher priced beef cuts. The discount of futures to the cash market helped support the early bounce but ideas that the steady break in beef prices will cause cash markets to fall in the weeks just ahead helped to drive the market to new lows. Cash cattle traded at $92.00 in Kansas and $93.00 in Texas last week, down about $2.00 on the week and the drop in beef prices late last week does not bode well for the cash this week. In addition, both regions indicate that there were unsold cattle last week which will show up again this week. The estimated cattle slaughter came in at 122,000 head Friday and 33,000 head for Saturday. This brought the total for last week to 661,000 head, up from 625,000 the previous week but down from 666,000 a year ago. While slaughter was down just.8% from last year for the week, beef production was down 2.8% from last year due to the lighter weights. The Commitments of Traders Futures and Options report as of June 8th showed an aggressive selling trend from fund traders which is normally seen as a bearish short-term force. Non-Commercial traders were net long 86,107 contracts, a decrease of 18,554 contracts for the week. Trend-following fund traders (Non-Commercial excluding index funds) are now net long 57,503 contracts which is down 17,695 contracts for the week. This is still seen as a hefty net long position for funds given the recent trend and new selling may get active if support levels are violated. Commodity Index traders held a net long position of 138,441 contracts, up 543 contracts for the week.
TODAY’S GUIDANCE: Given strong signals from outside market forces of a better than expected economic outlook, the oversold condition of the market after last week’s sell-off and the sharp break in the US dollar, traders can continue to monitor the market for technical signs of a low. The COT report still shows a hefty net long positions from fund traders.
TODAY’S MARKET IDEAS: August cattle appears cheap near 87.10 and it will take a move over 88.67 to spark some technical buying interest.
Cattle Market Commentary – 2010.06.14
by Terry Roggensack on June 14, 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 continues to probe for a near-term low and while outside market forces have turned much more positive on the general demand outlook, the beef market and the cash markets are still showing a weak demand trend. Boxed beef cutout values were down $1.79 at mid-session Friday and closed $1.99 lower at $153.17. This was down from $160.45 the prior week and is the lowest beef market since March 16th. August cattle tried to bounce early in the session on Friday but fell into the middle of the day and then pushed to new lows for the move and to the lowest level since February 8th. News of weak retail sales in the US helped to pressure the market on ideas that the US consumer is backing away from luxury items such as higher priced beef cuts. The discount of futures to the cash market helped support the early bounce but ideas that the steady break in beef prices will cause cash markets to fall in the weeks just ahead helped to drive the market to new lows. Cash cattle traded at $92.00 in Kansas and $93.00 in Texas last week, down about $2.00 on the week and the drop in beef prices late last week does not bode well for the cash this week. In addition, both regions indicate that there were unsold cattle last week which will show up again this week. The estimated cattle slaughter came in at 122,000 head Friday and 33,000 head for Saturday. This brought the total for last week to 661,000 head, up from 625,000 the previous week but down from 666,000 a year ago. While slaughter was down just.8% from last year for the week, beef production was down 2.8% from last year due to the lighter weights. The Commitments of Traders Futures and Options report as of June 8th showed an aggressive selling trend from fund traders which is normally seen as a bearish short-term force. Non-Commercial traders were net long 86,107 contracts, a decrease of 18,554 contracts for the week. Trend-following fund traders (Non-Commercial excluding index funds) are now net long 57,503 contracts which is down 17,695 contracts for the week. This is still seen as a hefty net long position for funds given the recent trend and new selling may get active if support levels are violated. Commodity Index traders held a net long position of 138,441 contracts, up 543 contracts for the week.
TODAY’S GUIDANCE: Given strong signals from outside market forces of a better than expected economic outlook, the oversold condition of the market after last week’s sell-off and the sharp break in the US dollar, traders can continue to monitor the market for technical signs of a low. The COT report still shows a hefty net long positions from fund traders.
TODAY’S MARKET IDEAS: August cattle appears cheap near 87.10 and it will take a move over 88.67 to spark some technical buying interest.
Tags: Cattle, Livestock
About Terry Roggensack