CME cattle futures are showing signs of fatigue after several days in a row of higher closes. Now in overbought territory, futures are no longer able to easily sustain gains, instead backing and filling with only soon-to-expire Apr LC able to hang on to green. The Apr/Jun spread has pushed to new highs, an almost $12 difference. That puts Jun over $14 discount to today’s cash top on the Fed Cattle Exchange in the south of $129.25.
Yesterday another 5k was added to the record LC open interest, which has merely ratcheted up the anxiety regarding a likely futures top.
Friday’s USDA Cattle-on-Feed report is expected to be bullish, confirming another month of aggressive marketings and placements falling short of enough which will leave the April 1 COF inventory slightly under a year ago. The pattern of big monthly feedyard turnover continues to occur.
Source: The Beef Read