New 2015 Cash Lows for Kansas

By Cassie Fish, CassandraFish.com

Negotiated cash cattle in Kansas traded $3 lower this morning at $143 setting a new low for that region in 2015, taking out the July low of $145. Packers continue to demonstrate their mastery over the cattle feeder at present, banking big profits and booking cattle advantageously from now through the end of 2015. Cattle feeders can’t wiggle out of the choke hold they find themselves and it being a long week buying for a short week isn’t’ helping.

As packers have bought cattle lower today they’ve backed up bids, smelling the fear as the downtrend in cash prices accelerates. Cash prices obliterated the May 2014 low and have now sunk to the lowest level since February 2014- and it’s occurred with the smallest F.I. slaughter in modern history.

CME cattle futures are lower too, though miraculously have not taken out Monday’s lows or last week’s low, which was the recent low for the move. Which brings the obvious question to mind, are live cattle futures smelling a basis change in the wind or is the whole complex headed even lower as September wears on.

Packer margins continue to come in well north of $50 per head as boxed beef prices edge slowly south while cattle costs improve for the packer seemingly hour by hour. This week’s kill will come in at 550K or higher and there is talk of a 515k kill next week with heavy Saturday kill’s on September 12. A 515k would be only 8k short of last year’s 523k. If a pick-up in slaughter levels does occur, it would be a positive development in the current bearish environment.

Looking at a spot continuation live cattle chart, today’s close in Oct LC will likely be the lowest since the Jun LC 2014 close in either late May or early June 2014. Either way, it’s a big disappointment to cattle feeders and futures bulls and coup for the packer and the futures bears.