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If cash cattle can trade at $119.00 this week, the downside appears somewhat limited but traders remain concerned with a steady to higher pace of production expected ahead and the consumer impact on beef demand during a period of rising gasoline prices. The market closed lower on the session yesterday and back near the middle of the week’s range and well up from the session lows. The early rally was met with increased long liquidation selling ahead of the long weekend and ahead of the USDA report for release after the close today. June cattle traded moderately higher early in the day and to the highest level since April 8th but futures turned down into the mid-day. Uncertainty on cash cattle trade this week and a sluggish and choppy beef market of the past week may have helped spark profit-taking selling after the early peak. Talk that cash might trade $1.00 lower at $118.00 this week helped to pressure. Cash traded at $119.00 in Kansas late yesterday. There was also talk of the circulation of video released by animal-protection group showing animal cruelty at a Texas range and this was seen as another reason for selling. Historically, these types of occurrences have had little impact on demand. For today’s Cattle-on-Feed report after the close, traders see placements up near 4% from last year and marketings for the month of March near 3% higher, which would leave on-feed supply near 5% higher than last year. Drought conditions in Texas and Oklahoma may have boosted feedlot placements during March, and this is expected to continue for April. Slaughter came in at 126,000 head which was a little lower than expected. This brings the total for the week so far to 377,000 head, down from 383,000 last week at this time and down from 383,000 a year ago. Boxed beef cutout values were unchanged at mid-session yesterday and closed 6 cents lower at $188.89. This was down from $189.53 the prior week.
TODAY’S GUIDANCE: Consumer demand in the US and export demand this year have been better than expected. Another week of poor consumer demand weather is expected ahead before better temperatures are expected. We can’t rule out further weakness into the end of the month but the downside is limited unless cash markets come unglued. Outside market forces are strong for today. The outlook into the 4th quarter continues to look more positive from a supply perspective.
TODAY’S MARKET IDEAS: June cattle resistance is at 117.20 and 118.05 with support at 115.80 and 115.02. Look for choppy to slightly lower trade over the near-term. December cattle support is at 123.47 and a close above 124.60 may be needed to assume a resumption of the uptrend with 128.27 as next upside objective. Look for December to continue to gain on August.
Cattle: Limited Downside Unless Cash Moves Lower
by Terry Roggensack on April 21, 2011
Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
If cash cattle can trade at $119.00 this week, the downside appears somewhat limited but traders remain concerned with a steady to higher pace of production expected ahead and the consumer impact on beef demand during a period of rising gasoline prices. The market closed lower on the session yesterday and back near the middle of the week’s range and well up from the session lows. The early rally was met with increased long liquidation selling ahead of the long weekend and ahead of the USDA report for release after the close today. June cattle traded moderately higher early in the day and to the highest level since April 8th but futures turned down into the mid-day. Uncertainty on cash cattle trade this week and a sluggish and choppy beef market of the past week may have helped spark profit-taking selling after the early peak. Talk that cash might trade $1.00 lower at $118.00 this week helped to pressure. Cash traded at $119.00 in Kansas late yesterday. There was also talk of the circulation of video released by animal-protection group showing animal cruelty at a Texas range and this was seen as another reason for selling. Historically, these types of occurrences have had little impact on demand. For today’s Cattle-on-Feed report after the close, traders see placements up near 4% from last year and marketings for the month of March near 3% higher, which would leave on-feed supply near 5% higher than last year. Drought conditions in Texas and Oklahoma may have boosted feedlot placements during March, and this is expected to continue for April. Slaughter came in at 126,000 head which was a little lower than expected. This brings the total for the week so far to 377,000 head, down from 383,000 last week at this time and down from 383,000 a year ago. Boxed beef cutout values were unchanged at mid-session yesterday and closed 6 cents lower at $188.89. This was down from $189.53 the prior week.
TODAY’S GUIDANCE: Consumer demand in the US and export demand this year have been better than expected. Another week of poor consumer demand weather is expected ahead before better temperatures are expected. We can’t rule out further weakness into the end of the month but the downside is limited unless cash markets come unglued. Outside market forces are strong for today. The outlook into the 4th quarter continues to look more positive from a supply perspective.
TODAY’S MARKET IDEAS: June cattle resistance is at 117.20 and 118.05 with support at 115.80 and 115.02. Look for choppy to slightly lower trade over the near-term. December cattle support is at 123.47 and a close above 124.60 may be needed to assume a resumption of the uptrend with 128.27 as next upside objective. Look for December to continue to gain on August.
Tags: Cattle, Livestock
About Terry Roggensack