CME: Futures Start Choppy then Close Low Range, Wednesday07 February 2013
US - Live cattle futures got off to a choppy start but quickly softened and remained under pressure throughout the day, write market experts at the Chicago Mercantile Exchange.
Futures ended 35 cents to 92 1/2 cents lower for the day, which was a low-range close. The boxed beef market set back today after posting strong gains to start the week.
While this morning's choppy boxed beef prices do not necessarily call into question whether the beef market has put in a low, this did add a bit of uncertainty, write market analysts at Profarmer.
April cattle closed sharply lower on the session as demand concerns and weak packer margins has traders nervous over the premium structure of the market. The market saw aggressive selling develop into the pit opening and moved from just slightly lower on the day to sharply lower on the day into the mid-session.
This filled most of the gap left after the Cattle-on-Feed report on January 25th and the market pushed to the lowest level since the report. February cattle saw some early strength based on demand for re-deliveries, a lack of new deliveries and ideas that the cash market will trade higher later this week.
Weakness in the stock market and a sell-off in grains and other commodity markets added to the negative tone. Talk that boxed-beef prices are near a near-term low added to the support on the break. Ideas that feedlot areas in Kansas and Nebraska could see some rain this weekend was also seen as a slightly positive force.
Boxed-beef cut-out values were down $0.51 at mid-session to $183.80 which is down from $186.76 last week. Slaughter came in lower than expected at just 119,000 head which is sometimes a sign of weak demand from the packer.
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