The cattle markets disappointed from the start yesterday, opening 20-80 points lower and trading as much as $1.80 lower by the end of the session in the fats and $3.00+ lower in the feeders. This weakness comes despite more widespread weather troubles, instead mirroring the disappointingly steady-money cash cattle trade that developed on Friday. Mandatory USDA recaps out yesterday showed the cash cattle trade came on larger trade volume than previously believed, with $127 trading 7,000+ head in KS, $126 trading in TX and NE, and $123 in IA. Even after yesterday’s weakness, nearby Dec futures sit at $130+, keeping deliveries in the picture for next week and we all remember the sharp futures plunge and spread weakness seen the last time deliveries loomed in early-October. Nearby Oct live cattle futures collapsed from $133.70 to $123.07 in the week prior to first notice day; the Oct-Dec spread traded from -3.30 to -8.30! The market looks to be attempting some degree of cash-futures convergence now and last week’s poor cash trade has prompted futures to do the majority of the work.
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