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October cattle pushed to a new contract high overnight, before slipping lower for the session. Weakness from outside markets helped pull futures back under 100, but the rally was supported by strong beef prices this week and expectations that packers will pay-up for live inventory with strong margins. October cattle closed sharply higher on the session yesterday, and closed at a new contract high. With talk of higher cash cattle trade this week and continued strength in the beef market, short-covering and some new speculative buying helped to support. Sellers for much of the past week have been waiting for a top in the beef market, and this has not yet occurred. A lack of surprises in the USDA Cattle-on-Feed report, which came out with a bearish tilt on Friday afternoon, was offset by continued strong gains in the beef market. Traders await cash cattle news this week, with offers at $102 to start the week and no bids as compared with $100 trade last week. A 12-week high in beef prices has traders leaning to the positive side for cash cattle this week, and October is trading at a discount. The estimated cattle slaughter came in at 128,000 head yesterday, which was well above trade expectations and suggests stronger than expected demand from the packer for live inventory. The surge in beef prices has helped improve packer profit margins, and this may have boosted packer demand. Slaughter was up from 124,000 last week, and up from 127,000 a year ago as this time. Boxed beef cutout values were up $1.37 at mid-session yesterday and closed $1.16 higher at $162.93. This was up from $155.62 the prior week, and is the highest beef price since June 2nd. The COT report as of August 17th showed Non-Commercial traders (funds) were net long 115,824 contracts, which is a historically high level.
TODAY’S GUIDANCE: Exports remain strong and the uptrend in beef prices remains intact, but the huge net long of the funds is a concern for the bulls. The upside break-out on record volume is impressive and with beef prices moving higher again yesterday, the market appears to be in a position to attract more buying. The market is extremely overbought, but there is still no technical sign of a peak. Support for October cattle is back at 97.90 and 97.25.
TODAY’S MARKET IDEAS: Any sign of a near-term top and/or significant weakness in the financial markets could spark a correction.
Cattle Market Commentary – 2010.08.24
by Terry Roggensack on August 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!
October cattle pushed to a new contract high overnight, before slipping lower for the session. Weakness from outside markets helped pull futures back under 100, but the rally was supported by strong beef prices this week and expectations that packers will pay-up for live inventory with strong margins. October cattle closed sharply higher on the session yesterday, and closed at a new contract high. With talk of higher cash cattle trade this week and continued strength in the beef market, short-covering and some new speculative buying helped to support. Sellers for much of the past week have been waiting for a top in the beef market, and this has not yet occurred. A lack of surprises in the USDA Cattle-on-Feed report, which came out with a bearish tilt on Friday afternoon, was offset by continued strong gains in the beef market. Traders await cash cattle news this week, with offers at $102 to start the week and no bids as compared with $100 trade last week. A 12-week high in beef prices has traders leaning to the positive side for cash cattle this week, and October is trading at a discount. The estimated cattle slaughter came in at 128,000 head yesterday, which was well above trade expectations and suggests stronger than expected demand from the packer for live inventory. The surge in beef prices has helped improve packer profit margins, and this may have boosted packer demand. Slaughter was up from 124,000 last week, and up from 127,000 a year ago as this time. Boxed beef cutout values were up $1.37 at mid-session yesterday and closed $1.16 higher at $162.93. This was up from $155.62 the prior week, and is the highest beef price since June 2nd. The COT report as of August 17th showed Non-Commercial traders (funds) were net long 115,824 contracts, which is a historically high level.
TODAY’S GUIDANCE: Exports remain strong and the uptrend in beef prices remains intact, but the huge net long of the funds is a concern for the bulls. The upside break-out on record volume is impressive and with beef prices moving higher again yesterday, the market appears to be in a position to attract more buying. The market is extremely overbought, but there is still no technical sign of a peak. Support for October cattle is back at 97.90 and 97.25.
TODAY’S MARKET IDEAS: Any sign of a near-term top and/or significant weakness in the financial markets could spark a correction.
Tags: Cattle, Livestock
About Terry Roggensack