The close was of interest, reportedly with a large professional still trying to goose February with a buy February sell April spread. The volume by that large professional was enough to overwhelm what was there for the Goldman roll pressuring April relative to February. The cattle slaughter figure released after the close confirmed the talk mentioned in the midday comments about some slaughter plants not operating. The 86,000 slaughter estimate suggests that it was more than a couple of plants. Packers have obviously backed off slaughter due to the lack of live supply after three weeks of relatively light purchases. The reduction in beef supplies made it easier for packers to raise prices to beef buyers, upping Choice prices a dollar and Select prices $2. The decline in the Choice-Select spread fits with the bear's case about larger near-term supplies amid backlogged marketing's. The January 1 on feed more than 120 days is estimated to be about 135% of the year ago number. Such a large number would seem to argue against higher cattle prices for the near term. The divergence in expectations is getting even wider. With another snowstorm forecast at the end of the week (although it has been softened in the latest model run), I have now heard estimates as high as a 20% reduction in beef supplies (death loss and weight loss) on the assumption the wintry weather pattern continues. That seems extreme (perhaps a mis-quote or an inflated figure just thrown out there for shock affect), but the weather pattern by those likely giving such estimates is "unprecedented in their lifetimes". I think that the weight data will be very important here in helping to dictate a direction. Thursday's report will show weights for cattle marketed after the first snowstorm, having to wait until next Thursday to get cattle marketed after the second snowstorm.

Feeder cattle futures were higher on Monday. Not much new to add here relative to the midday comments. The gains seemed to lose ground as the Oklahoma City trend of $1-3 lower circulated. The gains for the day can be attributed to futures discount to the feeder index, to the lower corn futures, and to the higher fat cattle prices, both cash and futures. The March contract is the most active and looks to have resistance at the recent highs around 99.75 with support at the host of moving averages around 97.50.

Source: Inside Futures