CME Board Mimics A Rollercoaster
After several days of up and downs in CME futures prices, cattle feeders saw their chances of getting back to steady slip away on Thursday as the board sold off.
During the board’s sell off, hedgers found a lucrative position to be in and began to take advantage of their position. This put the trade rolling in the south at $113. This level continued to trade a lot of cattle as packers shortened positions were revealed. There continued to be more sales later in the week at continued lower levels.
The north was not sheltered by the run down in the board. Prices continued to falter with cash cattle bringing $112-$114 and dressed cattle ranging $180-$182. There continued to be some lower trades in the north as the week went along.
Many producers continue to ask what will be the low for the spring. No one has the answer yet, but to be clear, if we continue to see a large basis between cash and futures, hedgers will continue to sell aggressively. With the cutout continuing to grow and packers continuing to purchase cheaper cattle, packers will continue to aggressively harvest cattle.
This could be a blessing in disguise as we begin to get into some of our largest numbers of the year. As long as there continues to be a health scare here and around the world and the Stock Market continues to falter then we should expect the CME to follow along in step.
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