By Cassie Fish, CassandraFish.com via The Beef
Whether boxed beef, negotiated fed cattle or CME live cattle futures, volumes have dropped to very low levels. In the case of the
negotiated trade last week, it was the second smallest volume in 2015 and the third smallest in history, just under 36k. But despite the small movement, prices only averaged 0.63 lower.
Packers are posturing to try and buy cattle lower since producers carried over cattle. But just as true is the fact that packers will need to reload inventory after last week’s small buy. When it’s all said and done, cattle may very likely trade steady with last week, $150-151 and $238+ north.
Boxed Beef Volume Small Too
Yesterday’s USDA comprehensive boxed beef report showed last week was a miserably slow week of selling boxes in every category except formula, the fifth lowest total volume of 2015. True, production is small, but export sales continue to erode and there appears
to be no enthusiasm for booking out-front either.
Futures Volume Small; Open Interest Keeps Eroding
Yesterday’s volume was just over 30k in CME live cattle futures and OI dropped to 227,622 contracts, another new low and the lowest since 2009 as more traders exit, tired of the choppy action.
Where Did the Interest Go?
The small volumes in all segments illustrate the lack of market momentum more clearly than words. There may be too few cattle to
break the market significantly but there are a variety of factors that, at least for today, are limiting the likelihood of a big rally. Sometimes choppy markets beget choppy markets as traders look elsewhere for trend.
More than likely, the market will start to pick up as the calendar turns to October, better seasonal beef demand and the possibility of an over-due tough winter. There is also the strong possibility imports from Australia will slow by then. But this is a market focused on today not tomorrow and for today, urgency is far removed as everyone pares down inventories or trading positions.
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