Boxes Level Out as Bottoming Talk Increases With a +40 load increase in reported spot volume this week over last week, USDA boxed beef values are hinting at finding their footing, with small gains being posted yesterday in the ribeye, chuck, round and beef 50s. Boxes are almost $25 and $35 off of their highs on choice and select respectively, close to 10-13%. Seasonally though, we remain a couple weeks away from brisk fall demand. Cash Barely Stirring Very little cash news is available thus far. A couple of major packers have bid +3 on cattle that typically trade basis, though the cattle have not traded as of yet. There were rumors of $242 being paid in the Corn Belt, which would be on the sloppy side of last week’s range. Last week’s 5-Area average was $156.74, with the weaker Corn Belt trade pulling the average down below the $158, which was the lowest price paid in TX/KS/W.NE. The trajectory for this week’s cash certainly feels another $1-2 lower might happen, since packers have cut kills and are leveraging larger captive inventories against those trading in the negotiated market. Even still, last week’s volume was extremely small, and packers can’t survive entirely on captive supplies. Front End Futures Oversold CME cattle futures have acted pretty well this week, in the midst of lots of bear news. Thus far today, Oct LC has sagged, but technical indicators clearly show this market as oversold as it was when it bottomed about one month ago. Still futures are showing no signs of acceleration either, only a quiet holding pattern near the 10-day moving average. Another leg down from here seems less likely as each day progresses. On the upside, a sustained move above $155.90 in Oct LC, this week’s high so far, would go a long way to quickly change momentum and attitudes, signaling the likelihood of a futures bottom and maybe even going as far as holding cash prices steady for the week. Lean Finally Slips The cutter cow cutout, 5 day rolling average printed down $3.06 yesterday afternoon at $232.03. Though lower, it’s still in the same range it’s traded in over the last 6-7 weeks and only minor weakness is expected. Looks like the fed/non-fed spread will begin to widen back out.
Posted on: Thu, 25 Sep 2014 17:52:47 +0000
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