FED STEER PRICES
GOING NOWHERE FAST
Prepared by Hales Cattle Letter
A Two-Dollar Trading Range But...
Since August first, the weekly average fed steer price in Texas has had a low of $64.69 and a high of $66.82. Prices during the week ending August 1 were $66 with prices this week back to $66 once again.
However, the weekly average choice cutout price has been in a definite downtrend during the same time. Prices during this period started at $107.96 and have fallen to $101.76 this week.
Relatively tight fed supplies during September and early October forced the packer to pay an average price of $66. However, tight fed supplies didn't help beef sales. Even with slaughter cutbacks, packers have been unable to stop the downward spiral of cutout prices. A lot of red ink in the industry this fall.
Bullish Psychology Failing?
During the late summer, bullish attitudes pushed deferred cattle futures prices to as much as $8 over fed cattle prices. For many weeks, the cattle market appeared to be something other than what it was. Feeder cattle sold at ever higher prices and placements outpaced previous years month after month. It was supposed to be a bull market.
Remember the old saying: “You can't make a silk purse out of a sow's ear.” All of the funds buying, chart reversals, support levels, new moons, black moons, full moons, cycle bottoms, and cattle feeder's prayers couldn't stop the futures decline or turn fed prices higher.
Fed Supplies To Increase
Friday afternoon, the Cattle on Feed report will be relesed by the USDA. Considering the overcrowded feedlot conditions from Texas through Nebraska, placements in September should be well above last year for the ninth consecutive month. As a result, fed cattle supplies will increase from late October through January.
Fed cattle prices could continue to trade sideways for another week or two before increasing supplies force prices back to the lows of the year by late November or early December.
October 17, 1997David Hales and Tom Horton
Hales Cattle Letter
P.O. Box 1623, Amarillo, Texas
THE ALLENDALE ADVISORY REPORT |
STRATEGY FOCUS |
WEEKLY OUTLOOK
ECONOMIC PERSPECTIVE |
FED STEER PRICES GOING NOWHERE FAST
U.S. ECONOMIC AND INTEREST-RATE OUTLOOK
STICKING WITH THE U.S. TREASURY MARKET |
THE TODD MARKET TIMER
CASH AND BONDS-- THE RODNEY DANGERFIELDS OF FINANCIAL ASSETS?
MYERS ON FUTURES |
THE COPPER JOURNAL |
COMMODITY FUTURES FORECAST WEEKLY REPORT
INTEREST RATE WATCH |
NIKKO MARKET COMMENTS
Copyright 1997, by Consensus Inc. All American and Pan American rights Reserved. editor@consensus-inc.com
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