Cattle Futures Give Up Most of 4th Quarter Rally Posted on 01/15/2015 by The Beef By Cassie Fish, CassandraFish It took from August until late November to rally almost $24 bucks to all-time highs and only 8 weeks later, Feb LC has retraced .78% of that move. Cattle traders waiting for an open interest flush were rewarded yesterday with OI down 5k, making yesterday’s 264,741 open contracts the smallest since January 6, 2010, clear evidence of the growing bearish speculative attitude towards commodities.BOW_COMMERCIAL_PROTEIN_150x203_v2 Yesterday the first three contract months of LC demolished their respective December lows and the Dec spot low as well, sending the market down over 300 points as panic swelled. Feb LC traded to the lowest level since August filling a 12 point gap on the daily between $154.87 and $155. Today, LC opened higher and on the early push, Feb LC was almost 300 points above yesterday’s low of $153.97 before slipping once more. Though Feb LC seems to have found it’s footing with the bull spreads working and the market now oversold technically. Feeder cattle futures, on the other hand, are stumbling, as reports of lower cash feeder sales circulate along with the widespread awareness that after a record profit year in 2014, there will be close-outs with red ink in 2015. Feeder cattle charts look technically bearish and their December lows at risk. Cash Cattle Collapse; Packers Back in the Black It is mind boggling that only a week ago, fed cattle prices traded from $168 to $172, averaging just under the $170 mark. So far this week there has been limited trade between $260 and 265 dressed, about $10/cwt lower than last week and $164-164.50 live. Ironically the choice boxed beef price made an all-time high yesterday and packer margins dramatically moved close to $100 per head, from negative to positive in less than a week. Of course the bearish spin on all-time high boxed beef prices is “watch out below” as prices come crashing down. But the reality may be far from that prediction as beef production is significantly below a year ago, led by a short-fall in cow kill. Clearance over the next 3 weeks will likely be good to excellent, with warming temps, Super Bowl XLIX, and extra cash in everyone’s pocket. Packer margins are likely to stay black for a while, and some have added hours for next week and even for this Saturday. Is It Friday Yet? With an upcoming 3-day weekend on tap for traders, it’s likely the big drama is over for now, while the job of sorting out the long-term, big- picture ramifications of this week’s extreme action has begun. 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.
Posted on: Thu, 15 Jan 2015 20:42:12 +0000
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