Livestock –
Another wild ride in cattle futures yesterday. After initially pushing sharply higher, cattle futures broke sharply during the session positing a daily reversal on the spot LCM chart. I fielded a lot of questions asking why the reversal yesterday, and to be honest I didn’t have any real “news” to report. I simply think it is equal parts market exhaustion and fears of packers’ interest in bidding cattle right now. You might ask why the packer would have any such fears considering they have not shown any up to this point, and that would be fair. However, note anecdotal reports suggest that forward beef sales are starting to slow significantly with boxed beef prices at these levels. The chart below shows the USDA’s data on boxed beef sales volume over the past several weeks and you can see it has really slowed. Perhaps the cutout has reached a point where demand is suffering? Well, if the cutout has reached that level, you can bet the packer is not interested in seeing cattle prices at these levels for long either.
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