Feeders Melt-down, Fats Follow to New Lows

Commodity trading runs on two fuels–fear and greed. jtl

From The Beef By Cassie Fish, CassandraFish.com

A Handbook for Ranch ManagersUnresponsive to a neutral to positive USDA Cattle on Feed report and the biggest F.I. cattle slaughter since October, CME cattle futures have begun this new week sharply lower as the free-fall continues, taking some prices to the lowest levels since June.Planned Grazing: A Study Guide and Reference ManualWith expanded limits in both markets today of 450 points for LC and 675 for FC, feeder cattle futures are using the majority of that room. Reports of sharply lower cash feeder cattle sales late last week coupled with a bearish technical picture have pushed all but expiring Jan back to early June levels.

Environmental & Natural Resource Economics: The Austrian ViewAlso retracing to levels not seen since early June are all LC contracts from April LC on back. The third quarter lows are history while the market revisits the big breakout area which followed the major low made in live cattle futures on May 27 and May 22 in feeders. That late May futures low was made $5 discount to cash prices at the time, cash bottoming at $144.39 on the 5-Area average reported by USDA. Amazingly, today Jun LC 2015, reaching $141.10, has traded with $5.70 of the spot low made by Jun LC 2014 on May 27.

  Disconnect Consistent

Combat Shooter's HandbookThese facts are powerful reminders of the continuation of the disconnect between cash and futures, since last week’s negotiated live trade averaged close to $159.60, above the December 2014 cash low of $158.51 and far from the August 2014 cash low of $153.16.

Commercials Go Bargain Hunting

The Betrayed: On Warriors, Cowboys and Other MisfitsThe extreme discount of futures to cash did inspire some long hedging as last Friday’s Commitment of Traders’ report, with activity through Tuesday, Jan 20, confirmed money managers and swap dealers have heavily liquidated positions, over 14k, while commercial players increased long ownership by 11k as long hedgers take advantage of futures prices below where cash prices traded much of 2014.

The Essence of Liberty: Volume I: Liberty and History: The Rise and Fall of the Noble Experiment with Constitutionally Limited Government (Liberty and ... Limited Government) (Volume 1)  The Essence of Liberty: Volume II: The Economics of Liberty (Volume 2) The Essence of Liberty: Volume III: A Universal Philosophy of Political Economy (Liberty: A Universal Political Ethic) (Volume 3)Today’s action has taken futures within the vicinity of some historical mathematical extremes. At this point, other than fear and money pressures, plausible explanations are scarce for the violent, extreme market action.

Real World Check-in

In the real world, tops bids were noted early today at $1.50 over. Packers are black and in need of inventory, which they fully expect to buy cheaper.

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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The Essence of Liberty: Volume I: Liberty and History: The Rise and Fall of the Noble Experiment with Constitutionally Limited Government (Liberty and ... Limited Government) (Volume 1)The Essence of Liberty Volume I: Liberty and History chronicles the rise and fall of the noble experiment with constitutionally limited government. It features the ideas and opinions of some of the world’s foremost contemporary constitutional scholars. This is history that you were not taught at the mandatory government propaganda camps otherwise known as “public schools.” You will gain a clear understanding of how America’s decline and decay is really nothing new and how it began almost immediately with the constitution. Available in both paperback and Kindle versions.

You might be interested in the other two volumes of this three volume setA: The Essence of Liberty Volume II: The Economics of Liberty and The Essence of Liberty Volume III: Liberty: A Universal Political Ethic. 

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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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