AgriVisor Cattle Commentary

Monday, November 02, 2015

***** Cash Analysis: The rebound in wholesale beef prices over the last month has made packers wary of paying up for cattle.  And with the usual seasonal turn to turkey and the break in pork prices, their hesitancy is understandable.  But it still looks to us like the negatives and uncertainty that have invaded the cattle market are more of a short term phenomenon.  The opportunity the lower futures and lower cash prices offered to packers, retailers, and the restaurant trade should still bode well for beef demand between the Thanksgiving and end-of-year holidays.  Given that beef prices have been a challenge for nearly 2 years until this fall’s break presented a different picture to those in the consumption side of the industry.  It won’t bring new highs, but should bring higher prices than those prevailing at this time.  Over the next couple of weeks, look for cash prices to slip to the middle $130s, if not closer to $130.  But in December, we see them move up into the low $140s. And packer demand should begin to get more robust ahead of Thanksgiving.

***** Tech Comment: Monday’s action in cattle futures didn’t offer many clues, but the action still fits with that of late last week suggesting the rally is tired.  The inability of Dec to get over $141.90 suggests it is headed for another test of the $139.55-$140.05 gap.  If Dec closes under that, the potential to move to a new short term high will be very limited.  Feb cattle look similar. But for both, it may be cattle futures are set to turn into a sideways congestion trade temporarily.  In the process, both could slip back to their breakout supports at $138.97 on Dec and $140.92 on Feb.

***** Live/wholesale prices:  Trade was inactive to start the week.  Friday’s trade was relatively active, with animals trading at $133-$138 live and $210 dressed.  Wholesale beef closed at: choice $219.61 -0.43, select $212.52, +0.45.

***** Daily Cash Recommendation: With cash prices moving into the high $130s, you should be willing to price cattle.  There’s no reason to expect a big collapse soon, but it may be more difficult to substance prices at these levels until later in November. 

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