Dare I start to believe that cattlemen and traders are beginning to look at the market's fundamentals for direction and insight instead of the most recent Cattle on Feed (COF) report?
For a long time, I've struggled with how the market reacts to the COF report. Instead of looking at the report and trying to discern whether its findings are sound and how it will affect both the short- and long-term markets, traders have been known to simply react (mostly negative) to the report if the actual USDA numbers differ from pre-report estimates.
However, that wasn't the case with the most recent COF report. Last Friday (June 23), USDA released another COF report, which shared mostly expected figures, but the number of cattle placed in May did fall outside analyst estimates. Analysts estimated that placements would land anywhere between 100.1% and 103.7%, but on Friday afternoon, placements in May totaled 1.96 million head, which drove placements to 105% compared to a year ago.
Normally this type of finding would have dramatic consequences for the upcoming week's market, but when Monday's (June 26) market closed, both live cattle and feeder cattle prices closed mixed with more focus seemingly on the grain market and its nature than on last week's COF report.
The COF report should be used as a tool when evaluating the cattle complex and trying to discern its direction, but in Monday's market, traders inarguably valued the fundamentals more than the most recent report. I find this to be extremely encouraging as both cattlemen and traders will need to rethink their marketing strategies in the current bull run in order to capitalize on the opportunities at hand. If Monday's market was an insight into anything, I think we witnessed just that.
ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com
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