Cattle Market Sees Steady Prices Amidst Mad-Cow Concerns

Strategic Insights -

Cattle prices in Chicago are anticipated to remain steady despite the uncertainty surrounding mad-cow disease, as traders wait for post-trade cash cattle value indicators and boxed beef demand. The USDA reported a slight increase in boxed beef cutout values, but operating margins for cattle packers were reported as a minus $7.05 per head. Traders are cautious, with some holding short positions, while the overall cattle market remains oversold.

Key Takeaways:

  • Traders are anticipating steady cattle prices, with floor traders waiting for post-trade cash cattle value indicators and boxed beef demand.
  • The USDA reported a slight increase in choice grade boxed beef cutout values, up $0.10 at $145.63, while select was down $1.17 at $133.70.
  • The operating margin index for cattle packers was a minus $7.05 per head, indicating general industry health concerns.
  • Traders are watching for signs of post-mad-cow beef demand, with some holding short positions and considering the recent oversold market conditions.
  • Federal and state agriculture officials plan to exhume a mad-cow affected carcass to determine the animal's age.
  • The CME has a recent history of posting new contract lows, with April and June posting the bulk of open interest.
  • Spread traders are holding short June positions against April, August, and/or October longs.
  • Cash cattle values are seeing attempts to trim $1 per hundredweight each week.

Statistics:

  • Choice grade boxed beef cutout values increased $0.10 to $145.63.
  • Select grade boxed beef cutout values decreased $1.17 to $133.70.
  • The operating margin index for cattle packers was a minus $7.05 per head.
  • CME feeder cattle cash index quote was down $0.08, at $102.28.
  • The volume of sales for fabricated loads was about 340, according to the USDA.
  • The load count for trimmings and coarse grinds was 131.

Sources:

  • Dow Jones Commodities News via Comtex (03-16-2006)
  • USDA reported data (03-16-2006)
  • Jim Cote, Dow Jones Newswires (312-715-6284)
  • Comtex SmarTrend(SM) Alert, As of Sunday, 03-12-2006 23:59.