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The market remains in a consolidation over the past three weeks and fears that consumer demand would take another step lower helped drive the market to the low end of this consolidation in Friday. However, cattle, the stock market and many other markets saw these fears as overblown and the market is now near the high end of the 3-week range. December cattle has stayed weak into the delivery period as fears of hefty deliveries similar to October helped to pressure. The bulls are hopeful that consumers may shift to a little more beef into early December after poultry and pork specials into Thanksgiving. Bears are concerned that higher beef prices this week could slow beef demand from the consumer. February cattle pushed slightly higher on the session yesterday finding support from short-covering and a continued firm tone to the beef market. Traders remain negative based on ideas that beef prices will slip, but beef is still coming in higher than last week. There is apparently some hope that cash cattle will trade firmer this week on ideas that last week’s drop in average weights will mean tighter supply. For the estimated weekly slaughter report for the week ending November 28th, average weights were pegged at 1,300 pounds from 1,306 pounds the previous week and the actual report from last year showing average weights for the week at 1,309 pounds. Traders see cash cattle moving from Kansas to Texas this week after cash cattle traded at $85.00 in Texas last week but just $83.00 in Kansas. The Commitments-of-Traders reports for the week ending November 24th showed a mixed result from the funds. Trend-following fund traders reduced their net long position by 1,837 contracts to 7,744. However, index funds increased their net long position by 1,526 contracts to 122,296 contracts. The report news is considered neutral and positioning is not near an extreme. The estimated cattle slaughter came in at 120,000 head yesterday. This was down from 125,000 last week but up from 119,000 a year ago as this time. Slaughter came in well below trade expectations and this is considered a potential sign of weak demand from the packer for new inventory. Boxed beef cutout values were up 57 cents at mid-session yesterday and closed 20 cents higher at $141.63. This was up from $139.18 a week ago.
TODAY’S GUIDANCE: Near-term cash market news and near-term technical signals are mixed. We have a slight upward bias but would stand aside for now. Price action on Friday may have set the low end of the current trading range for February cattle near 84.75 with 86.35 and 86.77 as resistance.
TODAY’S MARKET IDEAS: Look for a recovery bounce but not a lot more.
