With Jun LC tied more and more to cash as each day passes, and expectations of another low placement number for April in the May 25 USDA Cattle-on-Feed report bolstering the far-out months, Aug LC is bearing the brunt of the bearish summer outlook and is the weakest contract.
Cash bids have surfaced this morning steady with yesterday- $192 north, $120 south. Packers continue to bid on cattle with time at lower money and are buying a few that way. Boxes are grinding higher seasonally and show no sign of topping yet. Pretty much, the immediate fundamentals are status quo.
The Goldman roll is well underway and the buying Aug piece of that transaction hasn’t helped Aug, where open interest now stands larger than Jun LC.
The longer the news stays good, the more optimism grows and thoughts that this market will ‘chew right through the numbers’ are being expressed daily. But based on USDA placement data, the supply is still on feed and yet to be harvested and the pace required to do so is significantly higher than current kills.
Source: The Beef Read