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Fund buyers have been active this week, and it may take exceptionally strong demand news or bullish outside market forces to rationalize the surge higher in prices this week. Weather is threatening to hold production down in the southern plains due to excessive heat, but the weather is a double-edged word as consumer demand is also weak when hot and humid weather persists. Boxed beef cutout values were up 20 cents at mid-session yesterday, and closed 58 cents lower at $150.69. This was down from $153.39 the prior week and is the lowest beef price since March 12th. The weak beef market should drive packer margins deeper in the red, and this may push cash cattle lower from $93.00 traded last week. This leaves October cattle at a stiff premium to the cash. October cattle managed to run higher early in the session yesterday and post new contract highs shortly after the day-session opening, before drifting lower to close moderately higher on the day but down near 75 from the highs. Funds were active buyers of cattle, even with weakness in the stock market and a sharp break in hogs. Weekly U.S. beef export sales came in at 9,300 metric tonnes, compared with the prior 4-week average of 12,400 tonnes. Cumulative sales for 2010 have reached 415,000 metric tonnes, up 33.1% from last year’s pace. The estimated cattle slaughter came in at 129,000 head yesterday. This brings the total for the week so far to 513,000 head, unchanged from last week at this time but up from 493,000 head a year ago. Average dressed steer weights for the week ending July 24th came in at 836 pounds, up from 832 pounds the previous week and down 1.3% from a year ago. Beef production for the same week came in at 513.5 million pounds, up 6.05% over year ago.
TODAY’S GUIDANCE: The weak beef market does not bode well for the bulls hoping to see higher cash cattle trade this week. Cash is likely to trade $92.00, which is $5.00 under the highs for October cattle yesterday. Trend-following fund traders were already net long over 71,000 contracts as of July 27th, and funds were active buyers this week which leaves the market overbought but still with no technical sign of a top. October cattle resistance comes in at 96.62 and 97.00, with support back at 95.12 and 94.67.
Cattle Market Commentary – 2010.08.06
by Terry Roggensack on August 6, 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!
Fund buyers have been active this week, and it may take exceptionally strong demand news or bullish outside market forces to rationalize the surge higher in prices this week. Weather is threatening to hold production down in the southern plains due to excessive heat, but the weather is a double-edged word as consumer demand is also weak when hot and humid weather persists. Boxed beef cutout values were up 20 cents at mid-session yesterday, and closed 58 cents lower at $150.69. This was down from $153.39 the prior week and is the lowest beef price since March 12th. The weak beef market should drive packer margins deeper in the red, and this may push cash cattle lower from $93.00 traded last week. This leaves October cattle at a stiff premium to the cash. October cattle managed to run higher early in the session yesterday and post new contract highs shortly after the day-session opening, before drifting lower to close moderately higher on the day but down near 75 from the highs. Funds were active buyers of cattle, even with weakness in the stock market and a sharp break in hogs. Weekly U.S. beef export sales came in at 9,300 metric tonnes, compared with the prior 4-week average of 12,400 tonnes. Cumulative sales for 2010 have reached 415,000 metric tonnes, up 33.1% from last year’s pace. The estimated cattle slaughter came in at 129,000 head yesterday. This brings the total for the week so far to 513,000 head, unchanged from last week at this time but up from 493,000 head a year ago. Average dressed steer weights for the week ending July 24th came in at 836 pounds, up from 832 pounds the previous week and down 1.3% from a year ago. Beef production for the same week came in at 513.5 million pounds, up 6.05% over year ago.
TODAY’S GUIDANCE: The weak beef market does not bode well for the bulls hoping to see higher cash cattle trade this week. Cash is likely to trade $92.00, which is $5.00 under the highs for October cattle yesterday. Trend-following fund traders were already net long over 71,000 contracts as of July 27th, and funds were active buyers this week which leaves the market overbought but still with no technical sign of a top. October cattle resistance comes in at 96.62 and 97.00, with support back at 95.12 and 94.67.
Tags: Cattle, Livestock
About Terry Roggensack