Cattle Futures Catch; Doubts Grow; Beef Sells

From The Beef By Cassie Fish, CassandraFish.com

CME cattle futures may be posting triple digit gains this morning after last week’s thrashing, but it will take more than a few hours of trading higher before traders are convinced a tradable low has been made.

Explanations for last week’s melt down and sharp divergence from cash prices all seem to fall short of making complete sense. Fund rebalancing was being blamed, but the open interest pattern in live cattle futures shows little change after 2 days of activity, with total OI as of Friday 274,109 contracts, about 9k off of the low made in December and down only 678 contracts since last Wednesday. Bearish technical action definitely stimulated selling by longs and new shorts and with volumes big, it appears lots of change of ownership took place.

It is the velocity of the break last week’s break that knocked the breath out many folks and caution fills the air today. The number of bears seems to increase minute by minute while the confidence of bulls diminishes as quickly. For lots of traders, the January break coming so quickly on the heels of the December monster decline and in the face of bullish cash news surely means the bull market has seen its best days.

What About the Cash Market?

This week will benefit the beef packer and if you study history, that’s not unusual. Margins typically improve each year about this time and this week will be no exception. Boxed beef movement last week picked up dramatically as cutout prices rose almost $9 with gains made all over the carcass except the rib. Another $5 upside is expected this week.

Cash cattle prices are already expected to trade as much as $2 lower although packer interest has already been noted by cattle feeders this morning. Better margins should translate into increased slaughter levels back above 550k and provide some underlying stability to cash prices which should in turn, undergird futures, at least to a degree.

January strength in boxed prices typically lasts for the first 3 to sometimes 4 weeks of the New Year and last year carried for 4-5 weeks on grinding demand.

January Beef Sales Off to a Brisk Start

As the following charts illustrate, spot sales last week were adequate, but all other categories of beef sold, including exports, resulted in total sales well above last year. Impressive in the face of all the doom and gloom and well worth watching closely the next few weeks for it was the beef market that was the key to last January’s market performance.

2015-01-12_Chart1

2015-01-12_Chart2

2015-01-12_Chart3

2015-01-12_Chart4

2015-01-12_Chart5

2015-01-12_Chart6

 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.

FOLLOW LAND & LIVESTOCK INTERNATIONAL ON FACEBOOK

Check out our WebSite

Check out our Online Rancher Supply Store

A Handbook for Ranch ManagersA Handbook for Ranch Managers.  In keeping with the “holistic” idea that the land, the livestock, the people and the money should be viewed as a single integrated whole: Part I deals with the management of the natural resources. Part II covers livestock production and Part III deals with the people and the money. Not only would this book make an excellent basic text for a university program in Ranch Management, no professional ranch manager’s reference bookshelf should be without it. It is a comprehensive reference manual for managing the working ranch. The information in the appendices and extensive bibliography alone is worth the price of the book.

You might be interested in this books supplement: Planned Grazing: A Study Guide and Reference Manual.

Advertisements

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.
This entry was posted in Livestock & Meat Markets and tagged , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s