USDA is set to release its December 1 Cattle on Feed report Friday at 14:00 (CT). Keep in mind the markets were already telling us about real supply and demand during November.

December Futures (slide 1):

  • Closed November at $187.95, up $7.025 from the October settlement of $180.925.
    • The cash index closed November at $189.20
      • as compared to the October settlement of $190
    • Boxed Beef (for the month):
      • Choice finished November at $310.52, down $7.08 for the month
      • Select settled at $274.30, down $11.07 for the month
      • The spread closed at $36.22, as compared to the end of October’s $32.23
        • The November settlement was the largest monthly spread since at least June 2020 (as far back as my data goes)
    • The noncommercial net-long futures position grew by 15,315 during November, for the most part.
      • The market was showing early signs of a Rubber Band Disposition as the commercial side was putting pressure on cash and futures spreads (see below).

Futures Spreads:

  • December-February (slide 2) closed November at (-$0.65) as compared to the end of October (-$0.475)
    • Commercial traders put light pressure on the market during November indicating supply and demand were near equilibrium
  • February-April (slide 3) closed November at (-$2.15) as compared to the end of October (-$0.575)
    • Here we see commercial traders were more aggressive in their selling, indicating expected available supplies of cattle to be priced against the February futures contract (coming out in January and February) are projected to gain on expected demand
  • April-June (slide 4) closed November at $4.075 as compared to the end of October $6.325
    • Again the market showed aggressive commercial selling telling us cattle to priced against April, some of which were placed during November, grew faster than projected demand