Bulls had something to cheer about to finish off last week’s trading in the Cattle markets, after Thursday’s limit higher move followed by a $2-3 rally on Friday. However, somewhat of a letdown was the Friday afternoon USDA news, with the choice beef cutout coming in off $3.02 and the monthly COF (Cattle on Feed) report acknowledging larger supplies than were expected.  To sum things up March cattle placements were higher by 0.4% vs. last year, 5% above expectations, leaving the April 1 on feed total unchanged vs. last year, which was also more than anticipated.

We continue to see more cattle move North with Nebraska now taking over #1 in “on feed counts”, as we continue to observe placement weights head higher as the industry attempts to put as much “cheap gain” on animals outside of feedlots. Placements <600# were down 14% vs. last year, 600-699# were down 5%, 700-799 down 4% and >800# up 16%. These placement and on feed totals did come in higher than expected however in a historical view, they remain paltry.

We would anticipate Cattle futures opening lower due to the news this morning, but it’s more important technically where the trade ends up closing prices by session end.  Volatility continues to rise with values trading above all key moving averages in the June 15 Live contract. Chart structure has been improving with Resistance coming in at 155.00 and support being at the 145.00 area.   Keep your eyes on the cash trade later this week as a possible confirmation that this seasonal weaker trend is still in place.

If you would like to speak directly with one of our experienced Risk Managers feel free to call: 312-561-3145 or send an email to info@iasg.com.  You can also reach us through our website at www.iasg.com .


Cattle:  June15