What a Live Cattle Market With Open Interest at a 6-Year Low Means


By ShayLe Stewart, DTN



The other day I sent a quick message to a market mentor of mine, asking him a question, and he jokingly replied, "My crystal ball is broken right now, but I ordered another one on Amazon and it should be here in the next seven to 10 business days, check back with me then!" I'm not sure what part of that reply was funnier, the fact that a man in his 70s knows enough about Amazon to come up with that spirited of a reply, or that it's the truth; we all wish we had a crystal ball at this point.


The cattle market seems to be caught between two realities of now versus later. The short-term reality is the cattle market has an uphill battle ahead of it for at least the August and October contract period, when risk is likely and anything could happen. The long-term reality is that of a strong and prosperous market, when a thinner cow herd supplies fewer numbers to the beef supply chain, which favors cow-calf producers and potentially feedlots if corn prices regress.


Fundamental influences on the market are easiest for most to understand, whereas technical stimuli can be abstract, which is why we must address the point when the live cattle market's open interest reached a six-year low last week...


... Moving forward, much will depend on what boxed beef prices and slaughter speeds do...