Cattle Commentary 9-28

Peter McGinn General Commentary

Cattle markets were down again today with the December contract down .62 cents today settling at $146.275. Volume has been decreasing the past couple trading sessions, indicating to me that the market is losing downward momentum. Traders seem to still think there will be a short-term supply pinch which would give the market some support around these levels in my opinion. Cash on Tuesday traded with moderate volume, 4,607 head were reported in Kansas and 3,448 in the Texas Oklahoma region at $143. Feeder cattle markets are showing negative technical indicators with downside targets of support at $174 for the October contract.

Slaughter numbers came in at 128,000 on Tuesday which bring the total of the week up to 253,000 head which is actually down from the 255,000 head slaughtered last week but up from a year ago which was 238,000.  

The USDA boxed beef cutout closed up 59 cents yesterday at $248.43 which is down from the previous week of $251.64. Even with the Choice-Select spread is continuing to widen and it has maintained a counter-seasonal increase all summer. Relative supplies of quality graded beef have been different this year also. For the first half of this year, the percent of beef grading Choice was up a full percentage point as compared to last year. For the last 5 weeks though, there has been a larger decline of about 1.5% as compared to last year indicating supplies of choice are most likely going to get tighter.