The cattle markets were expected to open modestly weaker yesterday morning, but few imagined a $1.50 lower market in the first five minutes of the session and a limit lower trade within an hour. Nearby December live cattle stayed on the $3.00 limit through the remainder of the session, with synthetics trading an additional $0.60 lower by the end of the day. The action had the industry looking for a headline, but with none to be found. I hear rumors of a commodity trading firm closing on Friday that may have forced some liquidation yesterday, but open interest was essentially unchanged - not indicative of large volume liquidation. A more plausible explanation I think is technical-based fund selling as futures plunged through the bottom side of that chart gap noted here in recent days as well as some major moving averages. Through the futures mess, the choice beef cutout actually traded $1.74 higher yesterday, relieving some fears. We've still not seen any significant cash cattle trade yet this week. Look for a weaker start across futures again this morning with the chart picture still deteriorating.
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