Live Cattle Fundamental Support
The last couple of days have seen a mixed bag of news.
Friday's Cattle on Feed report was a little negative with only a 1% year/year drop in placements in December. Don't forget that November levels were 11% under. We also are trying to get past the psychological impact from a major snowstorm in the East. About one in every four Americans had been impacted.
On the positive end of things, Friday's Cold Storage report showed good news. It showed only a three million pound increase over November levels. That is below the normal increase of 16 for that month. Additionally, despite the 7.64 drop in choice beef and 6.45 drop in select, cash traded higher. Cash traded $1 higher with active numbers at both $134 and $135.
While you can make some valid points regarding the storm impact, let's point out this is now into the "old news" category. The news that is now developing is the supply angle. This afternoon's showlist count showed 17,000 head smaller than the previous week. On a seasonal basis last week's kill should be the largest for three months.
Kill levels drop sharply into February/early March. We see kills falling from 590,000 head last week to 540,000. Tightening supplies should add support to this market. $135 is still our target for February futures. That therefore means moderately higher prices for April.