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The steady trade in the cash cattle market already this week could leave the short-term downside potential in the market limited with August cattle holding a discount to the cash market. The market saw some hedge-lifting after the cash market activity picked up. Beef prices seem to be trying to hold steady/firm in the past week but the market remains concerned with the possibility that weak demand and slower consumer beef demand from hot weather could spark further long liquidation selling from fund traders who still hold a very large net short position. Very poor housing data helped spark some of the demand concerns yesterday. August cattle closed lower and experienced follow-through selling from the reversal-type action of Tuesday. Weak US economic news, weakness in other commodity markets and a sell-off in the stock market helped pressure futures and traders see hot and humid weather into the weekend as a potential negative force for consumer demand. The discount of futures to the cash market may have been a factor to help provide some support. Cash cattle traded steady at $91.00 in the southern plains and there was talk that buyers were asking for a few extra days for pick-up. The estimated cattle slaughter came in at 130,000 head yesterday which was a bit higher than expected and could be a sign of firm demand from the packer. This brings the total for the week so far to 387,000 head, up from 384,000 last week at this time and up from 382,000 a year ago. Boxed beef cutout values were down 41 cents at mid-session yesterday and closed 7 cents lower at $154.47. This was up from $153.77 the prior week. While the heat is seen as a bearish demand force, the center of the heat moves over the plains for parts of next week and this could also have a positive influence on supply as weight gains will be slower than normal and this could help keep production a bit lower than expected.
TODAY’S GUIDANCE: A bearish demand scenario may be about “priced” into the futures market but we remain concerned with the massive net long position of the fund trader. Cattle has been following the stock market and further weakness could keep fund traders as active sellers.
TODAY’S MARKET IDEAS: August cattle close-in support is at 88.37 and a move under this support could spark another leg down with 86.05 as a downside objective. It will take a move back over 89.10 to negate the bearish technical set-up and turn the minor trend up.
Cattle Market Commentary – 2010.06.24
by Terry Roggensack on June 24, 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 steady trade in the cash cattle market already this week could leave the short-term downside potential in the market limited with August cattle holding a discount to the cash market. The market saw some hedge-lifting after the cash market activity picked up. Beef prices seem to be trying to hold steady/firm in the past week but the market remains concerned with the possibility that weak demand and slower consumer beef demand from hot weather could spark further long liquidation selling from fund traders who still hold a very large net short position. Very poor housing data helped spark some of the demand concerns yesterday. August cattle closed lower and experienced follow-through selling from the reversal-type action of Tuesday. Weak US economic news, weakness in other commodity markets and a sell-off in the stock market helped pressure futures and traders see hot and humid weather into the weekend as a potential negative force for consumer demand. The discount of futures to the cash market may have been a factor to help provide some support. Cash cattle traded steady at $91.00 in the southern plains and there was talk that buyers were asking for a few extra days for pick-up. The estimated cattle slaughter came in at 130,000 head yesterday which was a bit higher than expected and could be a sign of firm demand from the packer. This brings the total for the week so far to 387,000 head, up from 384,000 last week at this time and up from 382,000 a year ago. Boxed beef cutout values were down 41 cents at mid-session yesterday and closed 7 cents lower at $154.47. This was up from $153.77 the prior week. While the heat is seen as a bearish demand force, the center of the heat moves over the plains for parts of next week and this could also have a positive influence on supply as weight gains will be slower than normal and this could help keep production a bit lower than expected.
TODAY’S GUIDANCE: A bearish demand scenario may be about “priced” into the futures market but we remain concerned with the massive net long position of the fund trader. Cattle has been following the stock market and further weakness could keep fund traders as active sellers.
TODAY’S MARKET IDEAS: August cattle close-in support is at 88.37 and a move under this support could spark another leg down with 86.05 as a downside objective. It will take a move back over 89.10 to negate the bearish technical set-up and turn the minor trend up.
Tags: Cattle, Livestock
About Terry Roggensack