Cash Market Woes
The cash market has become more of a struggle with the larger weights and ample supply. Proving they still have leverage over the producers, packers have been gathering cattle for delivery into January. Cash bids were around the $115 live and $182 dressed, with many of the trades scheduled for the second week of December. Whether perceived or actual, producers were still worried about finding a slaughter space despite an additional Tyson plant close to firing up again.
Boxed beef prices are staying strong, with choice beef above $240. Seasonal data point to a softer market during the Thanksgiving turkey streak, but beef continues with strong prices. A record high stock market and a world shortage of protein can take part of the credit.
On the export topic, China has approved six more Brazilian slaughter plants for purchasing beef. The inability for the U.S. beef industry to tap into the Chinese market has been a struggle since the early 2000s, but we have been sneaking in smaller quantities via Hong Kong. With African swine fever prevalent in China, it has at least created some better world beef demand.
The trendline on the charts broke last week creating a small flush in the futures. It is the first weekly close lower since the first week in September. Funds are long the market and will be tested as some of the chart signals show mixed signs. Keep the beef flying off the shelves and start aging a prime rib for Thanksgiving. I would welcome feed back on topics I present and thanks for reading.
Scott Varilek, Kooima Kooima Varilek Trading
The risk of loss when trading futures and options is substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.