Sort & Cull

The cattle contracts weren't safe from last week's wild rollercoaster ride in the futures complex as the equity markets plummeted thanks to external pressures, which consequently sent the cattle futures crashing lower last Monday. Throughout the remainder of the week the cattle complex saw hardly any support and was left to continue trading lower. Thankfully, on Friday, the market found some late-week trader support.

At this point, traders still seem uneasy in the futures as the spot October live cattle contract has again slipped below the market's 100-day moving average as its short-term resistance poses too much of a barrier. But with the market continuing to respect last Monday's low, one has to wonder if a short-term bottom has been established? Cattlemen desperately hope so.

It was helpful that this Monday's midday boxed beef prices printed higher and if boxes can lend stable support throughout the remainder of the week, there's a good chance the cattle complex keeps its current sideways trading range. Given where the market sits seasonally, reduced slaughter speeds will likely remain the theme through Labor Day as packers walk a fine line of wanting enough product to market to retailers, but also wanting to keep the cash market trending lower as feedlots will, most likely, regain the upper hand in the market later this fall and prices will then trend higher.

Through the eyes of day trader, it may seem boring to watch the cattle complex chop sideways. But for cattlemen, days of steady, stable trade are far better than gut-wrenching rollercoaster rides that can drain dollars out of the market within minutes.

Last week Southern live cattle traded for mostly $186 to $187, which is $1.00 to $2.00 lower than the previous week's weighted average. Northern dressed cattle traded for mostly $305, which is $5.00 lower than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 76,196 head. Of that 69% (52,592 head) were committed to the nearby delivery, while the remaining 31% (23,604 head) were committed to the deferred delivery. New showlists appear to be mixed, higher in Nebraska/Colorado, but lower in Kansas and Texas.

Shayle Stewart can be reached at shayle.stewart@dtn.com

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