The $118-121 Northern cash cattle business we'd seen on Tuesday was followed up with larger volumes at those levels again yesterday. I've also heard of some trade in KS at $124. All of this would be down sharply from last week's $128-130 market and down from $150 just eight weeks ago! Futures have reacted as poorly as possible, with nearby Oct LC futures trading down the limit for a second straight day yesterday. But with Oct still at $124+, Northern producers may still view physical delivery against futures as their best alternative for marketing. This threat has Oct futures speeding lower for convergence and the Oct-Dec spread very weak, trading all the way out to -$7.85 at one point yesterday. Beef prices remain under sharp pressure as well with the choice cutout at 18 month lows; beef 90s specifically were down 25 cents yesterday to $2.46/lb; beef 50s down to just $0.38, a multi-year low there. As the entire complex violently adjusts lower (beef, LC, FC, calves, cows, etc), there becomes a new topic we should all closely evaluate - counterparty risk.
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