Below is a sample of our 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!
The market action is bullish but the rally may have moved futures up too fast as beef prices may be slow to trend higher and packers will back away from the cash market if beef prices do not confirm the uptrend in cash cattle. The rally in the cash market so far has been impressive. February cattle closed sharply higher on the session yesterday and managed to push to the highest level since September 11th. Strength in outside markets helped support and a strong trend in beef prices over the past week and news that packers were bidding $84.50 with offers at $86.00 in the southern plains helped provide solid support. Cash markets usually trade on Thursday or Friday each week so the higher trade earlier than normal on the week left the impression that packer demand is strong. Boxed beef cutout values were up 20 cents at mid-session yesterday but closed $1.08 lower at $136.88. This was still up from $135.60 a week ago but may be seen as a disappointment to traders after the strong close in futures yesterday. The estimated cattle slaughter came in at 126,000 head yesterday which was a little higher than expected and may be seen as a positive development for packer demand. This brings the total for the week so far to 376,000 head, up from 374,000 last week at this time but down from 382,000 a year ago. There were 60 deliveries against the October futures yesterday which brings the month-to-date total to 831 contracts.
TODAY’S GUIDANCE: The market is in a solid uptrend and cash news has improved but futures are a bit overbought technically and some back-and-fill action may be necessary over the near-term. Beef prices were lower late yesterday, there are 60 more deliveries and the stock market slipped after the close. Buying support for February cattle is back at the 86.05-85.70 zone with 88.40 as next upside objective.
