Two’s Company, Three’s a Crowd

I suppose the shorts had their turn at the door yesterday - any bets the longs are following them out today? CME’s final numbers show open interest fell 851 contracts in live cattle and 1,904 in feeders. Which leads me to believe some of yesterday’s buying was shorts covering rather than new money coming in – consistent with the pattern we’ve seen over the past couple of weeks. After a rally like that, I wouldn’t be surprised if a few longs decided to pocket their gains today too.

But inevitably, fluctuation is what makes a commodity. Show me a futures chart that moves in one direction. Could be orange juice, coffee, grains, cattle - they all know how to make a nice rally look messy.

I’m also hearing from several sources there's staffing disruptions at a major processing plant in southwest Kansas following some immigration raids. Early estimates put the first shift's loss alone as high as 800 employees - so I’d be careful throwing out estimates on this week’s kill, but it should sure give boxed beef a boost.

Cash let a few out of the gate on Monday with some light trade in Iowa at $222, steady with the week before. I’d sure like to see the North pick up a couple of bucks this week - and I’m betting futures would too.

Meanwhile, Santa Teresa is still scheduled to reopen to Mexican cattle on Thursday. Santa Teresa’s port is the largest port for Mexican feeders - accounting for 43% of all live cattle trade we get from Mexico. Knowing the psychological weight of that, I’d like to think if we get through this reopening smoothly, the others should be a cakewalk -  hypothetically.

In the meantime, you know what isn’t psychological?? Fuel prices. If you didn’t hear, Trump is calling for a ban on diesel exports to ease the pain at the pump. Needless to say, I’m happy to see the focus shift to somewhere worthwhile – and away from beef. Have a good evening!

Thanks,

Samantha Cozza-Wright