CME Cattle Futures Roar Higher

Out of over 50 years of watching cattle markets, I don’t think I have ever seen anything quite this wild and woolly. Hang in there and don’t panic. — jtl

From The Beef By Cassie Fish, CassandraFish.com

Right out the door this morning, CME cattle futures added triple digits as confidence grows that the cutout will be higher this week and packers are in sore need of inventory to fill scheduled slaughter needs. A shot of extra cold temperatures and miserable wind chills this week will give cattle feeders more backbone when negotiating with packers and prices are already anticipated to be $165-166, $2-4 higher.

         Feeders Limit Up

After making a new low for the move last Friday, spot Jan feeders have traded close to up the 450 point limit today, though today’s high of $218.17 is dollars from last week’s high of $221.77. It will take a close above that level before feeder futures are clearly on their way and some may argue that will be a tough feat to accomplish given the technical and psychological damage done recently. If Jan can top that level, there is a monster gap on the weekly chart between $223.60 and $225.60 that will beg to be filled.

         Staying Power to Come From the Cash Market

A rally of that magnitude in the entire cattle futures complex, must be led by a dynamic up in the cash cattle and boxed beef prices in January. Refilling the pipeline always provides a rally of some sort, but the power of this year’s rally will be especially critical as it will influence packer margins and the size of those four full kill weeks in January. This will be an important test of beef demand and likely set the stage for the first quarter of 2015. If the economics warrant and slaughter levels are brisk, it will give the cattle feeder the opportunity to regain currentness.

         LC Technicals Strong

Today’s action in live cattle futures is very impressive with most active Feb LC limit up and above the weekly highs for the last 3 trading weeks. In fact Feb has exceeded a 50% retracement and is approaching the 61.8% retracement of the entire break, $166. Feb is now within $5.45 of the high for the month of December and $10.37 off of the month’s lows speaks to the resiliency of a market many had discounted just days ago.

The Beef is published by Consolidated Beef Producers…for more info click here.
Disclaimer:  The Beef, CBP nor Cassie Fish shall not be liable for decisions or actions taken based on the data/information/opinions.

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