Morning Livestock Report, 01/07/2016

Thursday, January 7, 2016

Just as we’d seen Monday, much weaker outside markets had the cattle complex trading solidly lower out of the gate yesterday morning, before futures recovered by day’s end. Can we do it again today?? Overnight equity markets are again sharply lower and leading energies, metals, and grains into or near fresh contract lows. The news specific to the cattle industry, however, remains mostly positive and improving if anything. The spot boxed beef market continues its blistering rally, up another $5+ in the choice cutout yesterday, which makes an incredible $37 since the lows on Dec 21!! As noted yesterday, it’s impossible to gauge whether this is any real improvement in demand or just the effect of holiday-shortened slaughter schedules, but the fact remains the market is up 19% in roughly two weeks. We’ve seen similar moves in the cutout in each of the past two years: in 2015, the cutout rallied $25 and peaked on Jan 14; and in 2014, the cutout rallied $43 and peaked on Jan 22.

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