What a week. Or should I see past two weeks? Since the second week of Oct cattle have been under pressure losing significant ground for the past two weeks. The majority of the pressure has come from outside influences that appear to believe that the market system is not working and that they need to artificially try and force the price of beef for the consumer lower. It is interesting that if the consumer was not happy with the price, they are paying at the retail level, they would stop buying the product, which would be the signal that prices have gotten too high, but so far that has not been the case. So instead, to bring the price lower we import product to increase supply.
Cattle gapped lower at the start of the week and proceeded to extend losses early. Feeder cattle took the brunt of the selling pressure, hitting expanded limit down levels soon after the opening bell. Selling was tied to heavy long liquidation as funds started to run for the exit door due to last week’s increase in Argentina imports to the US. Light selling was tied to news that Trump and Brazil’s president talked over the weekend and from the rumors of the meeting, Trump is set to remove the 50% tariff on Brazilian goods and increase imports of Brazilian beef. The trifecta of pressure was due to reports Mexico is coming to town this week to talk about re opening the US Mexican border to allow for cattle to cross into the US.
Selling pressure continued in the cattle market on Tuesday with live cattle posting small losses while feeder cattle took a much larger hit on the close. Heavy selling hit the feeder cattle market early, forcing most of the front months sharply lower while the deferred months were flirting with limit down on and off throughout the session. Live cattle traded better with most months trading on both sides of the fence for most of the session. Selling was tied to concerns about imports from Brazil and whether or not the US will allow cattle into the US from Mexico.
Technical buying and a bit of encouraging fundamental news helped cattle close sharply higher midweek. Cattle gapped higher on the opening bell and never really looked back. Live cattle traded with strong gains throughout the session while feeder cattle trading with quadruple gains for much of the morning session but faded back to post mainly triple digit gains during the second half of the session. Early support came from the news that the border between the US and Mexico will remain closed for an extended period as both counties work to get control of the new world screw worm in Mexico. Support was added by reports that the US and Brazil are just starting talks on resuming trade between the two countries.
In total Dec live cattle have retraced $25 from their recent high to recent low while feeder cattle have retraced about $55. This might be enough in the short term to clean up the overbought condition and with fundamental news stabilizing, which will help add confidence to the funds to slow down liquidation.
Feeder cattle’s daily trading volume set an all-time high on Tuesday while live cattle volume was at 5-year highs. This should be a sign that most of the funds that want out are out.
Cattle traded mainly quiet to end the week Thursday. The front month Oct live cattle posted large gains with most of the support coming from the need to bring cash live cattle prices and the expiring Oct futures market closer together. Cattle opened the session higher with most of the early support spilling over from Wednesday’s strong performance. Technical buying added support as cattle continue to bounce off major support. Gains were trimmed around midsession when traders realized that beef was not mentioned in the China trade deal. A steady cash trade helped live cattle recover late in the session. Feeder cattle were supported by a weaker corn market. Cash was reported trading at $228 to $230, down $5 to $9 from last week.
For the week, October Live cattle went off the board at $236.60 up $2.85. Dec live cattle closed at $229.675 down $4.25. October Feeder Cattle went off the board at $347.275 down $7.025 while November feeder cattle closed at $338.875 down $13.325.
For the month, October Live cattle closed up $4.75. Dec live cattle closed down $5.10. October Feeder Cattle closed down $13.75 while November feeder cattle closed down $20.475.
Cattle Weekly Comments October 31
Cattle Weekly Comments October 31
What a week. Or should I see past two weeks? Since the second week of Oct cattle have been under pressure losing significant ground for the past two weeks. The majority of the pressure has come from outside influences that appear to believe that the market system is not working and that they need to artificially try and force the price of beef for the consumer lower. It is interesting that if the consumer was not happy with the price, they are paying at the retail level, they would stop buying the product, which would be the signal that prices have gotten too high, but so far that has not been the case. So instead, to bring the price lower we import product to increase supply.
Cattle gapped lower at the start of the week and proceeded to extend losses early. Feeder cattle took the brunt of the selling pressure, hitting expanded limit down levels soon after the opening bell. Selling was tied to heavy long liquidation as funds started to run for the exit door due to last week’s increase in Argentina imports to the US. Light selling was tied to news that Trump and Brazil’s president talked over the weekend and from the rumors of the meeting, Trump is set to remove the 50% tariff on Brazilian goods and increase imports of Brazilian beef. The trifecta of pressure was due to reports Mexico is coming to town this week to talk about re opening the US Mexican border to allow for cattle to cross into the US.
Selling pressure continued in the cattle market on Tuesday with live cattle posting small losses while feeder cattle took a much larger hit on the close. Heavy selling hit the feeder cattle market early, forcing most of the front months sharply lower while the deferred months were flirting with limit down on and off throughout the session. Live cattle traded better with most months trading on both sides of the fence for most of the session. Selling was tied to concerns about imports from Brazil and whether or not the US will allow cattle into the US from Mexico.
Technical buying and a bit of encouraging fundamental news helped cattle close sharply higher midweek. Cattle gapped higher on the opening bell and never really looked back. Live cattle traded with strong gains throughout the session while feeder cattle trading with quadruple gains for much of the morning session but faded back to post mainly triple digit gains during the second half of the session. Early support came from the news that the border between the US and Mexico will remain closed for an extended period as both counties work to get control of the new world screw worm in Mexico. Support was added by reports that the US and Brazil are just starting talks on resuming trade between the two countries.
In total Dec live cattle have retraced $25 from their recent high to recent low while feeder cattle have retraced about $55. This might be enough in the short term to clean up the overbought condition and with fundamental news stabilizing, which will help add confidence to the funds to slow down liquidation.
Feeder cattle’s daily trading volume set an all-time high on Tuesday while live cattle volume was at 5-year highs. This should be a sign that most of the funds that want out are out.
Cattle traded mainly quiet to end the week Thursday. The front month Oct live cattle posted large gains with most of the support coming from the need to bring cash live cattle prices and the expiring Oct futures market closer together. Cattle opened the session higher with most of the early support spilling over from Wednesday’s strong performance. Technical buying added support as cattle continue to bounce off major support. Gains were trimmed around midsession when traders realized that beef was not mentioned in the China trade deal. A steady cash trade helped live cattle recover late in the session. Feeder cattle were supported by a weaker corn market. Cash was reported trading at $228 to $230, down $5 to $9 from last week.
For the week, October Live cattle went off the board at $236.60 up $2.85. Dec live cattle closed at $229.675 down $4.25. October Feeder Cattle went off the board at $347.275 down $7.025 while November feeder cattle closed at $338.875 down $13.325.
For the month, October Live cattle closed up $4.75. Dec live cattle closed down $5.10. October Feeder Cattle closed down $13.75 while November feeder cattle closed down $20.475.