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After a contract high on August 24th, October futures have closed lower for six sessions in a row and are down again overnight. Seasonal weakness in beef and cash markets along with indications that speculators hold a massive net long position, have traders nervous of a continued long liquidation sell-off over the near-term. October cattle closed sharply lower on the session yesterday, as stops were activated on the late break below last week’s lows to drive the market to the lowest level since August 18th. Traders believed that there was aggressive long liquidation selling at the end of the month, as fund traders lightened up on their enormous net long position posted in the last COT report. As of August 24th, non-commercial traders were net long 134,766 contracts. A turn up in the stock market helped to provide underlying support, and strength in the hog market added to the positive tone, but the market lacked new buying interest yesterday and retreated from the early highs. News that packer bids emerged at just $97.00 versus offers at $102.00 yesterday may have been seen as a slight negative. Nebraska cattle bids were only $96.00, as compared with $99.00-$99.50 last week. The discount of futures to cash and a lack of new deliveries helped to provide some underlying support for the early bounce as well. August cattle expired at 97.25 yesterday. The estimated cattle slaughter came in at 130,000 head yesterday. This brings the total for the week so far to 260,000 head, up from 256,000 head last week at this time and up from 259,000 head a year ago. Boxed beef cutout values were up 32 cents at mid-session yesterday, but closed 10 cents lower at $163.64. This was up from $163.60 the prior week. There were 4 new deliveries overnight.
TODAY’S GUIDANCE: We remain concerned with the massive net long position of fund traders, and the impact on the market “if” cattle become out of favor by large commodity fund traders. Outside markets look supportive today, but the selling could still increase if support levels are taken out. Close-in resistance for October cattle is at 98.05 and 98.57, with 96.67 and 95.87 as support. Uptrend channel support comes in at 96.87 today, and selling could intensify if this level is violated.
TODAY’S MARKET IDEAS: Wait for a more significant set-back to buy October or December cattle. For now, the market is overbought and vulnerable to fund long liquidation selling.
Cattle Market Commentary – 2010.09.01
by Terry Roggensack on September 1, 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!
After a contract high on August 24th, October futures have closed lower for six sessions in a row and are down again overnight. Seasonal weakness in beef and cash markets along with indications that speculators hold a massive net long position, have traders nervous of a continued long liquidation sell-off over the near-term. October cattle closed sharply lower on the session yesterday, as stops were activated on the late break below last week’s lows to drive the market to the lowest level since August 18th. Traders believed that there was aggressive long liquidation selling at the end of the month, as fund traders lightened up on their enormous net long position posted in the last COT report. As of August 24th, non-commercial traders were net long 134,766 contracts. A turn up in the stock market helped to provide underlying support, and strength in the hog market added to the positive tone, but the market lacked new buying interest yesterday and retreated from the early highs. News that packer bids emerged at just $97.00 versus offers at $102.00 yesterday may have been seen as a slight negative. Nebraska cattle bids were only $96.00, as compared with $99.00-$99.50 last week. The discount of futures to cash and a lack of new deliveries helped to provide some underlying support for the early bounce as well. August cattle expired at 97.25 yesterday. The estimated cattle slaughter came in at 130,000 head yesterday. This brings the total for the week so far to 260,000 head, up from 256,000 head last week at this time and up from 259,000 head a year ago. Boxed beef cutout values were up 32 cents at mid-session yesterday, but closed 10 cents lower at $163.64. This was up from $163.60 the prior week. There were 4 new deliveries overnight.
TODAY’S GUIDANCE: We remain concerned with the massive net long position of fund traders, and the impact on the market “if” cattle become out of favor by large commodity fund traders. Outside markets look supportive today, but the selling could still increase if support levels are taken out. Close-in resistance for October cattle is at 98.05 and 98.57, with 96.67 and 95.87 as support. Uptrend channel support comes in at 96.87 today, and selling could intensify if this level is violated.
TODAY’S MARKET IDEAS: Wait for a more significant set-back to buy October or December cattle. For now, the market is overbought and vulnerable to fund long liquidation selling.
Tags: Cattle, Livestock
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