Wholesale beef has been stable in recent days. However Wednesday it dropped $2.66 and $2.26 for choice and select. Wednesday's drop in beef could help influence that lower cash cattle trade expected this week. Cash cattle, which traded at $90 last week, are expected to trade $1 lower this week. However, futures are implying $83 cash by the end of the month!
Friday could show November had the largest loss in jobs of this economic downturn. It would be natural to assume a few more months of bad news left here. We are respecting the bear trend and the fact bears are in control with all the bad news floating around. However, are futures correct in implying cash cattle will absolutely tank in the next four weeks? The stock market, and beef demand, typically bottom before job losses stop. The market is simply looking for any signs the "worst" is over. When that happens we can turn back to watching beef supply info. We do not believe this market will hit that realization for weeks however.
For hedgers we will hold those February puts we purchased earlier. For speculators we actually have a buy order out there. The long-term trend in Live Cattle is down. Contract lows in the February contract are support at 8380.
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