The 2013 contracts continue to consolidate near all-time highs as traders seem to be waiting for confirmation of higher cash cattle trade into the fall. It may take higher beef prices in order to rationalize higher cash cattle trade ahead. While packers may be in a position to push up beef prices, the ability to hold onto higher beef prices in a period of cheaper pork and surging US gasoline prices is in question. In other words, will the US consumer be in a position to absorb higher beef prices.
Boxed beef cutout values were up 53 cents at mid-session yesterday and closed 59 cents higher at $191.32. This was up from $189.62 the prior week and the highest since September 6th.
October cattle experienced an outside-day down and sharply lower close yesterday to turn the short-term chart picture negative. Talk of index fund rolling and ideas that the cash market could struggle to add to last weeks gains without sharply higher beef prices helped to pressure.
December closed just slightly lower on the day as this contract was supported by the index fund roll and from talk of tightening supply into the end of the year.
Reports that cash cattle in Kansas and Nebraska traded Friday at $124.00-$125.00, up $1.00-$3.00 from last week helped to support the early bounce. A lack of cash trade in Texas last week helped to keep the trade choppy.
Fears of consumer resistance to higher beef prices in a period of weaker pork values and surging gasoline prices at the pump was seen as a limiting force.
Slaughter came in below trade expectations at 125,000 head. This was up from 2,000 last week but down from 133,000 a year ago as this time.
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
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