Cattle futures plunged fast yesterday—led by Feeder Cattle—for no apparent reason or logic. Arguably, Cattle futures were in oversold territory. Yes, there are larger beef supplies on the horizon, and there’s bound to be positioning ahead of Friday’s Cattle on Feed report. On the other hand, cash fed cattle prices last week were the highest since June, front-end supplies remain snug by all accounts, and wholesale beef value are on the rise with plenty of seasonal upside. So, the best bet for the unforeseeable free-fall is computerized algorithmic trading that tripped some unknown trigger and sent the dominos tumbling.
After 65¢ lower in the nearly spent spot month, Live Cattle futures closed an average of $1.43 lower, (95¢ lower to $1.85 lower).
Feeder Cattle futures closed an average of $2.65 lower ($2.00 to $3.15 lower).
The sudden decline was apparently enough to entice some feedlots to pull the trigger. There were a few early trades in the Southern and Northern Plains at $128/cwt. on slow trade and light to moderate demand. That’s $2 shy of last week’s trade, but there were too few transactions to trend.
That helps explain why there were no takers for the handful of cattle (218 head) offered in the weekly Fed Cattle Exchange auction. One lot of heifers was passed out at $126.25.
Wholesale beef values continued to gain momentum. Choice boxed beef cutout value was $1.45 higher on Wednesday afternoon at $217.37/cwt. Select was $1.52 higher at $211.92.
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