By Cassie Fish, CassandraFish.com
Worry about the panic sell-off sweeping the globe hummed throughout the weekend. So far though the worst of it was seen immediately after the opening in most U.S. markets, with commodities and equities both clawing back, and in the case of hogs, corn and wheat, to green on the day.
Feeder cattle futures are taking it the worst, limit down Friday and down +$4 in most contracts today while live cattle futures are about 80 off their early low in relatively quiet trade. In early August, there were few who expected cattle futures to take out the July low let alone check the February low but indeed, that’s exactly what’s occurred in just a few short recent days. Only spot Aug LC and Aug FC are trading above its July low. Feeders made history of the February lows and made life-of-contract lows in many contracts today pressured by cattle feeding losses and dissipating confidence in the cattle market outlook.
Other Years; Other Disappointments
There have been a few other years when August has been a big disappointment. It happened in both 2001 and 2008, years when global influences took the market down. It also occurred in 2000 and 2009, though in the latter, it was the end of a downtrend and the birth of a long-term uptrend.
Perhaps the lousy performance in recent weeks is portending more of the same for the fall of 2015. The market structure itself is bearish in tone and price, with Aug LC about $2.50 below last week’s cash average and Oct LC $2.30 below Aug LC. Oct is more than amply compensating for softer cash cattle and boxed beef prices in September.
Is it Friday Yet?
This is the kind of week where it’s more important how we finish Friday, now that the initial panic is over. One eye is on the ags and the other bouncing between the equities and CNBC.
Cattle traders expect boxes to weaken this week and packers to do their best to buy cattle cheaper yet again. Cattle feeders, in turn, will be trying to buy feeders cheaper, if they try very hard to buy any at all.
Numbers- Quickly Forgotten
Friday’s USDA Cattle-on-feed report has already been forgotten, coming in as expected generally although less cattle were placed than expected and total on feed numbers stand 250,000 head more than a year ago. If this year has taught anything, it’s that numbers are secondary.
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