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Cash cattle market to drop, futures seen volatile, analyst says
With the extreme volatility in beef prices, futures look to stay volatile. June cattle closed $3.00 lower on the session, yesterday, at the low of the day.
August cattle closed sharply lower and experienced its lowest close since May 6.
Cash cattle traded at $118 in Texas, Kansas, and Nebraska on Monday with decent volume. This would suggest that the market is pricing in a very sharp break in the cash market, over the next several weeks.
Cash live cattle in light volume in lower prices on Tuesday. In Nebraska, 132 head traded at $113. Volume was much heavier on Monday and all of last week, averaging 4,000 head per day.
The USDA boxed beef cutout was down $18.79 at mid-ession yesterday, and closed $22.42 lower at $318.73. This was down from $385.49 the previous week and was the lowest the cutout had been since April 27. The price has dropped 33% from the all-time high, but it is still up 52% this year.
The USDA estimated cattle slaughter came in at 113,000 head yesterday. This brings the total for the week so far to 223,000 head, up from 110,000 last week at this time but down from 240,000 a year ago.
The huge discount to the cash market may help limit selling pressures on June cattle. Look for support at $94.65, with resistance at $97.70 and $98.45. August cattle resistance is at $99.45, with $95.45 and $91.20 as support.
For daily updates on cattle, hogs, corn, wheat, and the soy complex, visit The Hightower Report.
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