Archive for the ‘Cattle Futures’ Category

There is a current outlook surfacing that US beef supplies will not be able to keep up with demand.  Cattle futures may already be responding to this view as it seems to be finding support at these levels.

The USDA has reported just yesterday that wholesale beef is the highest its been in almost seven weeks, and that domestic beef production is expected to drop 4% this year.  This is after the US cattle-herd sunk to a 61-year low at the beginning of the year – according to the USDA.
            
“Seasonable temperatures will bring about higher consumer demand for beef. Cattle supplies are well below average, and this is going to keep (beef) prices well supported as we go through the summer grilling season,” said Kevin Craney, a senior commodities broker at RJO Futures in Chicago, in a recent e-mail exchange, regarding the current cattle futures situation.  Craney added, “Look for higher (beef) prices as we get closer to summer.”

The trend for cattle futures has just turned up recently according to my work.  We are currently long cattle futures in anticipation of this new trend continuing to emerge.

There is now the outlook of tightening domestic supplies of beef (and perceived forthcoming higher beef prices) thanks to the reporting of the USDA yesterday.  Cattle futures retreated today from their recent slide.

Specifically, the USDA stated yesterday they expect domestic beef production a little less than 1% from last month’s estimate, and 4% total less than last years.  The entire domestic cattle-herd, coming into this year, has been the smallest since the early 1950′s.          

“The sheer amount of cattle available for slaughter remains very tight as we move into the 2nd quarter of 2013,” said Kevin Riordan, director of research at Capital Trading Group in Chicago, regarding the current cattle futures situation.

The trend for cattle futures remains down, but feeders appear to be turning the corner.  As long as cattle futures remain a mixed-bag, I will await committing to direction until a clearer picture unfolds.

There seems to be an outlook for a cooler summer this year because this speculation has hit the cattle futures market and extended the current losses.  Further speculation for lower cattle futures is that the cooler will lower the prospects for grilling outdoors.

It’s no secret warmer weather promotes outdoor grilling, but colder weather is expected to continue though out the month across the Midwest to the east coast.  According to a respected weather service, they are expecting temperatures to cool anywhere between 8 to 14 degrees below normal.

Kevin Craney, a senior commodities broker for RJO Futures in Chicago, had this to say regarding the current cattle futures situation, “As winter temperatures continue to linger into spring demand for beef is being curtailed. Cattle (futures) have been in a downward trend, and this lack of demand will continue to fuel that trend.”

The trend for cattle futures is down is nothing but DOWN with new lows reach just today.  These new lows in cattle futures implies “no bottom” yet in sight, but before hopping on board I will require a pull-back higher in cattle prices.

Cattle futures appear to be lifted by attractive beef prices and perceptions of increasing demand for domestic beef.  Cattle futures have risen $2.50 from lows just last week.

The USDA has reported in the past 12 months, beef prices dropping over 7% (as well as pork prices declining, but chicken “rising”).  Just yesterday, a Midwest commodities analyst observed “wholesale” beef prices up almost ½% at a two week high, ultimately signaling more beef demand.

Cattle futures trend have been down for two months now.  We have been trading feeder cattle futures as an alternative to live cattle futures lately because feeders seem to trend better than live.  I’m awaiting a significant bounce higher, or a lower-risk alternative, to get short cattle futures again.

A former National Cattlemen’s Beef Association president, and active Montana cattle rancher is stating he had to sell calves and stop purchases of cattle after his pastures dried up.  He also stated his current herd of cattle is only 85% of normal.

This third-generation cattle rancher is talking about our nation’s worst drought since the 1930′s, and the shrinking domestic cattle herd which is presently the smallest since 1952 – all factors signaling smaller beef inventory and ultimately higher beef prices for everybody.  USDA data already shows sirloin costs this past December 10% higher than the year earlier.

Barb Levy, chief director for Futures & Options Xecution’s futures division in Chicago, had this to say regarding the current cattle futures situation, “Last year’s drought resulted in heavier sales of cattle last summer, and now the supply has become very tight.”

Cattle futures trend is indeed down at this time, but can change without a typical “bottoming” formation.  I must await cattle futures to pull-back higher in beef prices in order to get short this market lower-risk.

In the midst of a strong downward cycle in cattle prices, cattle futures halted the price decline and closed “up” for the first time since the first trading day of the year.  Feeder cattle prices are just about the same.

Japan’s health minister told reporters today their country will allow US beef imports for cattle that are 2.5 years old – up from 20 months previously – starting as early as February first.  The Food Safety Commission recommended the change in October emphasizing no increase in health risks.

“There seems to be a consensus building that we’ll see some tightening beef supplies in 2013.  On the heels of Japans decision to ease their restrictions on U.S. beef imports, Cargill has made idle a beef processing plant,” said Kevin Riordan, director of research at Capital Trading Group in Chicago, regarding the current cattle futures situation.

Cattle futures are clearly in a down-trend and any retracement higher in cattle prices would mean a low-risk shorting opportunity.  I will need cattle futures to come back significantly higher in order to get into this market

There is now the outlook that domestic US beef supplies are dwindling while demand increases.  This perception led cattle futures to their biggest rally in two weeks as this market tests its September highs.

USDA data reflects the average price for steers earlier this week was almost 2% higher than the week prior.  Also supporting higher cattle futures prices is meatpackers purchasing their animals this entire week to meet demand…just yesterday, it is reported 5% more cattle were processed than the week before.

“The cash (cattle) price is much lower than the (cattle futures) price.  At some point the markets will come together and the higher priced (cattle) futures markets seem to be closer to the real price of cattle,” says Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, regarding the current cattle futures situation.

The trend for cattle futures remains up with no top in sight.  We’re long cattle futures as they are just about $1 below record highs.

For the second time in the past three trading session, cattle futures closed up on signs fewer cattle will be available for slaughter next month.  Cattle futures have remained high priced because of this prolonged problem.

The USDA reported last week that feedlots have received 6% fewer animals since this time last year.  Because of this steady decrease, cattle futures prices climbed to a record $1.345 per pound one week ago.

Kevin Riordan, director of research at Capital Trading Group in Chicago, stated today regarding the current cattle futures situation, “A substantial reduction in the amount of contract cattle currently available will likely keep cattle (futures) prices firm as we head into the first quarter of 2013.”

The trend for cattle futures remains up and we are currently long this market.  No sign of a top for cattle futures just yet…

Enjoy prime-rib over the holidays…?  Well expect US cattle prices to spike as much as 20% in 2013, says the the world’s top beef producer.  Cattle ranchers are expected to be raising more beef instead of sending them to market.

Brazil’s “JBS” cattle-producing CEO says he expects his country’s beef production to slide up to 6% due to reduced processing.  When you take this into account, along with the USDA’s recent forecast of a US 4.2% reduction in beef production, then we have a real supply concern.

Kevin Riordan, director of research at Capital Trading Group in Chicago, stated today regarding the current cattle futures situation, “As grain prices retreat from records levels in 2012 ranchers should be able to retain cattle longer.  This will rebuild herds but also lead to lower beef supply as fewer animals are brought to slaughter.”

Cattle futures are mixed – live cattle futures in a technical uptrend, while feeder cattle down.  I am looking at both cattle futures markets for the best signals in their prospective trends.

Cattle futures are back on the rise towards their September record high prices on signs of improved demand for US beef supplies.  Cattle futures gained over $1 in pre-holiday trading.
The USDA reported US meat-packing plants processed nearly 259,000 head of cattle in just the past two days which is a 7% increase from just the week earlier.  Apparently, beef demand is also picking up in the wake of Hurricane Sandy on the east coast as those affected by electrical outages are restocking their storage freezers.

“Cattle (futures) prices are finding solid price support due to tight supplies and a strong rebound in the demand for beef,” said Kevin Riordan, director of research at Capital Trading Group in Chicago, regarding the current cattle futures situation.

The trend for cattle futures has been absolutely sideways – with a down-bias since the record highs of mid-September – as most of the other agricultural futures markets we trade.  I had been probing the short side of cattle futures on “low-risk” opportunities, but if this resurgence is for real, then I will have to allow the cattle futures market “prove” to me its real intentions…

Wishing you the best Thanksgiving Holiday!  Back to the markets on Monday, 26 NOV.