From CassandraFish.comBy Cassie Fish,
An explosive cash fed cattle trade Wednesday afternoon of up to $5 higher from a week ago saw packers compete aggressively for much needed inventory and has translated to triple digit gains in CME live and feeder cattle futures this morning.
Boxed beef prices have been rallying as since December 19 as reduced production has end users chasing limited offerings to restock coolers with beef trimmings, 90s and 50s, posting week over week gains of $8.74 and $13.98 respectively. And the rally is not over yet.
Steer Weights Down 14 Pounds from High
The USDA released the weekly update in data and steer weights came in at 892 pounds for the week ended December 22, the lightest carcass weight since September. Reports of big cattle finally getting cleaned up may not be exaggerated after all as mud, cold weather and a precipitous sell-off contribute to the seasonal drop in weights.
Feb LC Back to Key Level
Even with this morning’s big gains, Feb LC so far today has only checked its high made on Tuesday of $166.52. Its 50-day moving average is $166.30 and the .618 retracement of the break from contract high to $155.10 low is $166. Though still being tallied, it’s likely the 5-area average price for this week will come in just under $167. Futures are strong, but not willing to lead, so attention is already on where next week’s cash trade will take place.
Spot chart resistance is $167.25, Dec’s high this week. But the real game changer technically would be a push in January above the monthly spot high made December 1, $170.10, though to accomplish that feat, the cash market will have to decidedly trade above $170 in the next few weeks. If cutout value gains are substantial enough to push packer margins close to a sliver of green that could be enough to sponsor a trip into the low $170s.
One big positive for futures is the enormous flush in open interest that occurred taking live cattle futures OI to the lowest level since January 2010.
Feeder Rally Gains Momentum
After being badly bludgeoned, feeder cattle futures have finally made a new high for this week and have moved into the 200-point gap left after gapping lower Monday, December 15. Filled at $225.60, there’s another one between $229.60 and $227.62. A .618 retracement would take Jan FC back to $228.20, in the middle of that gap. It will take a strong fed cattle market and corn under $4 to fuel an assault on this overhead resistance.
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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