The Senate Banking Committee meeting did not go well for representatives of the Big 3 US Auto manufactures. There was very sharp criticism of the companies themselves and of any bailout package. The struggling economy continues to weigh on cattle traders in fear of waning demand.
Wednesday's sharp drop in the Dow gave us the lowest close of this downtrend. Stocks are at their lowest point in over five years. On Tuesday, hedged cattle in Nebraska were sold at $140. Wednesday hedged cattle were sold on a live basis at $88 to $88.50, which was $3.50 to $4 lower. That sets the stage for a $2 lower trade or so on un-hedged cattle from Kansas through Texas compared with $93 last week.
Contrary to all the bad demand expectations wholesale beef continues to rally. Wednesday choice was up 73 cents while select was up 35 cents. This furthers many in the trade's thoughts that wholesale beef may be trading reality, while futures trade is all being based on psychology and fears.
Supply information to be released on Friday, in the form of monthly Cattle on Feed, should be clearly bullish...if that information matters. We estimate Placements will be 9.8% smaller than last year. The rest of the trade agrees with us with an average of 8.9% decrease estimated. For more on Friday's Cattle on Feed report go to the Livestock Fundamental section of the Allendale Advisory Report.
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