Last week Live Cattle Futures posted very strong gains. October gained $8.325 and December gaining $6.975 on the week. December through February reached into new highs. October was unable to make new highs but still made a significant rally as it attempted to keep pace with a higher cash market. Going forward the futures market will keep a close eye on cash to maintain gains. As of this Monday morning, Live Cattle futures are taking a breather with October down $1.20 and December down $0.40. No cash has traded as of this point in the week. Cattle feeders were asking 165 in Nebraska as of the end of last week, but the packer holding at $163. We are hearing reports this morning of packers expecting to slow slaughter this week as they look to maintain margins. If this becomes the case we expect cash to be steady for the week. However, it’s still early in the week and much can change.
This is intended for informational purposes only. Derivatives trading may not be suitable for all investors and may involve substantial risk of loss. You should fully understand those risks prior to trading. Past financial results are not necessarily indicative of future performance.
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The Crop Progress report depressed corn prices Tuesday night. The belatedly released weekly USDA report boosted the corn crop rating 1% to 74% good-to-excellent, which is the second highest reading for this time of year since 1994. Thus, the prospect of huge fall yields is once again weighing on CBOT futures. December corn futures slid 2.75 cents to $3.61 early Wednesday morning, while May declined 3.0 to $3.8175.
An improved soybean rating is dragging soy prices lower as well. The USDA Crop Progress report raised the rating for the U.S. bean crop 2% to 72% good to excellent. This is a historically high rating, with such an increase at this time of year also being quite rare. The bearish CBOT response is hardly surprising, although persistently cool, wet conditions may soon be seen as hurting rather than helping yield prospects. November soybean futures slumped 6.0 cents to $10.26/bushel as Wednesday dawned over Chicago, while October soy oil skidded 0.05 cents to 31.90 cents/pound, and October soy meal slipped $1.1 to $371.1/ton.
Outside developments are weighing on the wheat markets. Although the Crop Progress report indicated continued deterioration of the spring wheat crop and a laggardly harvest, wheat futures declined in concert with corn and beans. That probably reflected spillover selling, as well as news that China had greatly increased its wheat stocks this year, thereby implying it will curtail its imports during the coming months. December CBOT wheat fell 5.75 cents to $5.4925/bushel in early Wednesday trading, while December KC wheat sagged 2.5 cents to $6.30/bushel, and December MWE wheat dipped 2.25 to $6.205.
Cash optimism seems to be supportive cattle futures. Cattle futures reacted well Tuesday to last week’s late cash strength. Beef prices actually dipped, but that seemed to do little to diminish optimism about potential seasonal strength during the days and weeks ahead. October live cattle futures surged 0.82 cents to 153.25 cents/pound Tuesday night, while December futures climbed 0.65 to 156.17. Meanwhile, October feeder futures jumped 0.95 cents to 219.77 cents/pound and January feeders leapt 0.97 to 213.57……Read More