More Stimulus, Inflationary Tilt Have Fund Traders Active in Cattle Market

Global Meat Demand is Stronger Too


By Terry Roggensack, Successful Farming - 1/6/2021


More stimulus plus inflationary tilt has fund traders active.


The driving force of the strength in the cattle market is seen from fund traders, whose aggressive buying is evidenced by the surge in open interest since Christmas.


With the inflationary tilt, ideas that there will be additional Covid aid packages from Congress, traders see a surge in demand in the months just ahead. Global demand is stronger as well. This clashes with the short-term reality of slow demand due to the virus and an ample near-term supply. While the long-term demand setup may be a positive, January beef demand looks sluggish and beef prices are under pressure.


The USDA boxed beef cutout was down $3.84 at mid-session yesterday and closed $3.97 lower at $205.90. This was down from $207.82 the previous week and was the lowest the cutout had been since October 28.


No trades were reported in cash live cattle, as of Tuesday afternoon. Last week, the weighted average steer price across all regions was $111.51, up from $109.19 the previous week. Cattle managed to take out Monday's low, yesterday, before a rally all the way up above Monday's high and to the highest level since December 29. The market recaptured all of Monday's losses.


Almost all commodity markets found support from the sharp break in the U.S. dollar to a new low and a very strong up day for energy prices. The USDA estimated cattle slaughter came in at 118,000 head, yesterday. This brings the total for the week, so far, to 230,000 head, down from 235,000 last week and down from 244,000 a year ago.






Limited upside for Feb hogs but funds active buyers April, June...