A declining showlist and some signs that the beef market may be stabilizing helped to support the solid gains yesterday. However, the market must still absorb the impact of weak packer profit margins and sluggish beef prices. It will take either higher beef or lower cash cattle prices in order to mend margins.
December cattle closed sharply higher on the session yesterday and up to a 4-session peak. The market saw choppy and two-sided trade early but strength in the hog market and ideas that much of the corrective break may be complete helped to support some bargain-hunting buying. Traders see a smaller showlist this week and a tightening supply in the months ahead as factors which might help to support an uptrend.
Beef prices were down sharply on Thursday and Friday but talk that plenty of beef moved at the lower price and that bulk demand improved on the break helped to support. Boxed beef cutout values were unchanged at mid-session yesterday and closed 21 cents higher at $189.19. This was down from $192.69 the prior week. Beef fell to the lowest level since August 13th on Friday and may be starting to stabilize.
The COT report on Friday showed non-commercial traders had liquidated 12,859 contracts of their net long position in just one week and the selling trend was seen as a negative force.
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