ManyHorses
Well-known member
Cattle prices broke down hard across the board on Friday in response to a combination of factors, none of which support continued high beef prices. Since my February 16th analysis of the Choice/Select spread it has dropped a full $5.00 leaving packers hard put to support the current market.
Packers, faced with consumer resistance on the upper end have opted to cut slaughter in hopes of forcing lower fed cattle prices by waiting out expected additional supplies from Canada beginning March 7th. Whereas packers will still need to process about 600,000/wk the mix will change away from 100% US producers to some US/Canadian mix and then stabilize. That means less demand for US cattle.
Fridays Cattle on Feed Report was equally unsupportive with COF up 2%, placements up 7% and marketings only about even with last year. It all adds up to more US cattle supplies with even more on tap from Canada beginning March 7th.
On my February 16th posting, in anticipation of a possible break in the market I suggested buying a March 100 put for $750.00 as protection - that put closed Friday at $1263.00 and showing a $513.00 profit.
On December 27th just before the mad cow scare dropped the feeder market dropped 5 cents, I had posted another protective trade which closed Friday with $1074.00 profit.
On January 3rd I posted another protective trade which carries a $588.00 profit.
Note: While I am a professional trader, I am not a broker and have no affiliation with any broker. I offer my viewpoints only as a courtesy to folks.
Packers, faced with consumer resistance on the upper end have opted to cut slaughter in hopes of forcing lower fed cattle prices by waiting out expected additional supplies from Canada beginning March 7th. Whereas packers will still need to process about 600,000/wk the mix will change away from 100% US producers to some US/Canadian mix and then stabilize. That means less demand for US cattle.
Fridays Cattle on Feed Report was equally unsupportive with COF up 2%, placements up 7% and marketings only about even with last year. It all adds up to more US cattle supplies with even more on tap from Canada beginning March 7th.
On my February 16th posting, in anticipation of a possible break in the market I suggested buying a March 100 put for $750.00 as protection - that put closed Friday at $1263.00 and showing a $513.00 profit.
On December 27th just before the mad cow scare dropped the feeder market dropped 5 cents, I had posted another protective trade which closed Friday with $1074.00 profit.
On January 3rd I posted another protective trade which carries a $588.00 profit.
Note: While I am a professional trader, I am not a broker and have no affiliation with any broker. I offer my viewpoints only as a courtesy to folks.
