As of this writing the cash cattle markets hadn't traded on the day in the TX/OK/NM region. The LCJ0 is posting a a 22 point gain. Feeder Cattle are fairing pretty well yet again with the FCJ0 @ +57.
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The USDA Livestock, Dairy, & Poultry Outlook led with the comment "Continued Contraction in Cow Herd Implies Decreased Production Beyond 2010."
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As I write this we are moments from the close of the LC and FC regular trading hours, and it surely seems that we are going to post yet another solid day for beef livestock markets - at least without much of a sell-off. The Daily Direct Regional report from the USDA is showing thru the afternoon report that negotiated deals are still at a standstill. We'll see if there's some late-day trade that occurs, perhaps up towards 90.50 to 91.00 like many expect.
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The inverse correlation of feeder cattle prices to feed prices is being challenged, for regardless of whether the prices of such inputs as corn or soymeal go up or down -- feeder cattle keep powering up. FCK0 posted new swing highs today, and look to close nearer the highs than not. The tendency for FCK0 is for a fall in prices starting anywhere from mid- to late-Feb, and break into mid- to late-March. On that note, I imagine it would be possible for this rally to pull back some.
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Today was a day where most commodities received a boost. The $US was lower by 70-some points basis the DXH0, equities were higher, and energies were higher - except for nat gas. The combination of these three helped push the commodity markets up, evidenced by the stronger CRB, Roger's, & Goldman indices.
Soybeans have been on a losing streak. Will this trend persist?
July '10 Soybeans (SN10) closed the first trading day of the year at $10.67/bushel. Today we're trading around $9.60 or so. Of the many reasons for the break, a primary one has been that the South American crop looks huge, and may very well get even bigger.
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The grain and oilseed markets today continued their upward march, that is until they didn't. Five of the most recent six trading days have seen higher intraday moves compared to the previous day with respect to SX9. Sx9 has rallied about $1.30/bushel from the swing lows made back on October 5, the catalyst for which is a slow harvest and cold snap.
Today, however, the market retreated from it's best levels of the day. And ended nearer the lows than the highs. Fund buying has been strong, but perhaps the market has become a little ahead of itself in the near term. We will watch closely to gauge if this is a sign of a better correction to come, or just a breather before the next leg up to the 200 Day Moving Average.
Bob 1.800.388.0998
One of the factors contributing to the weakness in beef has been the perception of formidable competition from declining prices in competing proteins. If we narrow the competition down to chicken, turkey, & pork, what we really find is turkey and chicken prices have rallied this year. Per the USDA's Economic Research Service indicated August y/y average retail price increases of both turkey and composite broiler to be 13.4% and 1.6%, respectively. Beef and pork have both had to endure y/y declines of 6.9% and 2.8%, respectively.
Being that pork and beef are following the same path, this Friday's September 1 Quarterly Hogs and Pigs published by the USDA may be influential to the beef market, and therefore, the live cattle futures traded at the CME Group.
I have attached the Daily Livestock Report dated 23, September, which includes estimates for the report on Friday. We'll talk about the report after it's release Friday afternoon.
Find the estimates for the report here: dlr-09-23-091
Bob
