With beef prices surging to the highest level since March 1st and a positive tilt to the cold storage report, the short-term cash fundamental news remains positive. However, the collapse in the stock market and weakness in other commodity markets overnight could keep buyers on the sidelines early today.
Boxed beef cutout values were up $1.34 at mid-session yesterday and closed $1.67 higher at $198.35. This was up from $193.96 the prior week. The monthly cold storage report looks a bit supportive to the cattle market with September 30th beef stocks at 425.6 million pounds, which was about unchanged from last year and down 2% from August. Cold storage stocks typically increase by 2% for the month so the 2% decline for the month is considered bullish.
December cattle closed unchanged on the session yesterday with the February up just 30 on the day. Hefty slaughter weights and sluggish marketing's during September may have helped sparked some long liquidation selling and a weaker US stock market added to the selling pressures. The market was trading 70 higher on the session early in a response to a bullish USDA report on Friday and from a positive tilt to outside market forces. By mid-session, however, the market was trading near unchanged on the day.
Placements of cattle into feedlots in September were down 18.8% from last year to a 16 year low, and this helped to support the market early. The lack of deliveries against the October cattle overnight and for the past several days plus expectations that cash cattle could trend higher in the weeks ahead helped to support. Texas cash traded at $127.50 last week, up $2.50 from the previous seek. Weakness in hogs and a sluggish marketing pace in September may have helped pressure the market.
Slaughter came in a little under trade expectations at 127,000 head. This was down from 126,000 last week and down from 127,000 a year ago as this time.
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