January Prices Set Up for More Advances

Yippie, this party will will never end. (Please do not take that statement seriously.) — jtl

From The Beef By Cassie Fish, CassandraFish.com

It’s a foregone conclusion fed cattle and boxed beef values will be higher this week, the debate is about how much higher. In order to fill normal slaughter schedules, packers must purchase more cattle than the last few weeks and will compete more aggressively in the negotiated cattle trade in spite of owning more forward contracted cattle than a year ago.

Winter weather is partly responsible for the up as it contributes to declining weights and lousy yields while forecasts for another bout of cold and snow this week show no immediate signs of reprieve.

Thoughts are widespread asking prices will be at $170 or higher. Boxed beef prices are increasing but are, as is typical, lagging the strong live prices. But with beef production last week clocking in 12% below the same week a year ago, the pipeline is empty and the choice cutout is expected to return to $255 level over the next several days, with grinds and ends leading the charge. It remains to be seen how food service and retail beef demand develops this month but the extra money in every vehicle owner’s pocket won’t hurt and will likely help.

Cattle Futures Take Out Last Week’s Highs

CME cattle futures handily took out last week’s highs early this morning with feeders back in the lead. Interestingly, Jan FC gapped higher, impressively clearing the 100-day moving average and so far leaving a gap on the way back up in the same area as one left on the big down. It’s a chart formation that will garner some of attention and will be watched closely. If it holds on Friday, the technical implications would be positive. The cash feeder index has rebounded to the $228 area and talk is a push to $230 is on tap while Jan FC posted a $226.35 high so far today.

For live cattle futures a positive was the 3,747 contract increase in live cattle futures open interest on Friday’s rally, even during a holiday week. With the holidays finally behind us, LC futures focus will be the degree of momentum of cash fed cattle prices over the next 4 weeks, as traders attempt to gauge if prices can reestablish in the +$170 area.

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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About Land & Livestock Interntional, Inc.

Land and Livestock International, Inc. is a leading agribusiness management firm providing a complete line of services to the range livestock industry. We believe that private property is the foundation of America. Private property and free markets go hand in hand—without property there is no freedom. We also believe that free markets, not government intervention, hold the key to natural resource conservation and environmental preservation. No government bureaucrat can (or will) understand and treat the land with as much respect as its owner. The bureaucrat simply does not have the same motives as does the owner of a capital interest in the property. Our specialty is the working livestock ranch simply because there are so many very good reasons for owning such a property. We provide educational, management and consulting services with a focus on ecologically and financially sustainable land management that will enhance natural processes (water and mineral cycles, energy flow and community dynamics) while enhancing profits and steadily building wealth.
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