Fed cattle on the negotiated market traded steady last week in the South at $191 per hundredweight. In the North, cattle traded $195 live per hundredweight and $305 dressed, on the very high side of the trade range from the week prior.

Packers purchased fewer cattle last week ahead of a short slaughter week this week.

Analysts estimate last week’s slaughter at around 617,000 head. This would be 8,000 more than the week prior and 4,000 under a year ago.

Boxed beef prices are erratic on account of spot market fill-in orders. The rib displayed toppy action last week. Seasonally, the top in the rib primal would have come early December. Once the rib tops out, choice boxed beef should move lower, likely testing support at $300 per hundredweight in the coming weeks.

Retail demand seems strong. Persons familiar with scanner data say that total beef sales have been running about 4% ahead of year-prior levels since the beginning of November.

USDA slaughter data for the week ending December 7 showed dressed steer weights two pounds lower from the week prior, at 952 pounds. Dressed heifer weights came in steady at 865 pounds. Seasonally weights should start tailing off here and move lower into the first 6 months of next year.

February live cattle posted a bearish reversal on Monday a week ago. Technical selling continued through Tuesday and Wednesday. Equity futures began selling off hard late Wednesday after the cattle close. This spurred additional selling on Thursday before the February contract found footing at the 200-day moving average around $186.30 per hundredweight. Live cattle futures staged a rebound to end the week, but February still finished the week down $3.625 per hundredweight at $188.40.

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Friday’s CFTC Commitment of Trader’s report for positions as of Tuesday, December 17 revealed managed money with a net long position of 136,213 contracts in live cattle, having added another 7,451 contracts. A decline in open interest of 9,603 contracts to 340,819 from Wednesday through Friday of last week suggests managed money may have shaved off some of their lengthy net long position, however.

January feeder cattle finished the week down $2.05 per hundredweight at $255.60. March feeder cattle finished the week down $1.85 per hundredweight at $255.825. March feeders left a gap hanging on the chart from Thursday’s lower open between $256.625 and $256.50 per hundredweight. This will be resistance going into early next week. January will have a level from support with the CME Feeder Cattle Index trading nearly $7 per hundredweight higher, last reported for the 7-day average ending December 19 at $262.15.

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Managed money also added another 794 contracts to its net long position in feeder cattle, reported at 19,116 contracts, their net-longest position since March of 2012.

USDA’s latest Cattle on Feed report landed within expectations with no real surprises. The number on-feed as of December 1 came in at 99.7% versus average trade expectation of 99.7%. Placements in November came in at 96.3% versus average trade expectation of 94.9%. A lower placements number was expected on account of the closure of feeder cattle imports from Mexico on account of New World Screw worm found in a cow in the southern state of Chiapas last month. Marketings in November came in at 98.5% versus average trade expectation of 98.2%.

The market will go back to trading cash fundamentals this week. Any continued volatility in outside markets will likely spill over into live and feeder cattle futures. Managed money continues to hold lengthy net long positions not seen in years, providing them with the firepower to pressure this market lower in quick fashion should they run for the doors.

The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.

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