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CME: Poor Chinese Data Puts Down Pressure on Market, Monday

16 April 2013

US - Cattle futures closed 80 cents to $1.65 lower, which was well off session lows in all but far-deferred contracts.

Fundamentals were brushed aside on Monday in favour of strong risk aversion. Risky assets were broadly sold off on Monday after disappointing Chinese economic data overnight, write analysts at ProFarmer.

But while there wasn't a fundamental focus yesterday, the macro-economic concerns will keep traders worried about beef demand.

June cattle closed 92 lower on the session but this was up 45 points from the lows. Outside market bearish forces were key to the break as steep losses in metals, energy and even grain markets helped to pressure, write experts at CME.

The market traded sharply lower on the session early on Monday and fell to another new contract low. A collapse in precious metals and other commodity markets seemed to be the most bearish force early.

The cold and wet trend for weather in the central part of the country expected to continue again this week added to the bearish tone as the demand outlook remains weak. Traders see a sluggish global economy and a firm US dollar as reasons to suspect weak beef exports ahead.

There are still no deliveries against the April contract but focus of attention short-term is on weak consumer demand and long liquidation out of commodity markets in general.

Trend-following fund traders held a net long position of just 7,021 contracts as of April 9th so many traders see a further long liquidation threat as minimal. Non-commercial and nonreportable combined traders held a net long position of 15,036 on the same date.

August and deferred cattle also posted contract lows with heavy speculative selling noted.

Boxed-beef cut-out values at mid-session were down 6 cents to $189.46 as compared with $190.95 last week at this time.

Slaughter came in higher than expected at 122,000 head.

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