{"id":2171,"date":"2017-06-28T05:59:16","date_gmt":"2017-06-28T11:59:16","guid":{"rendered":"http:\/\/www.ctsfutures.com\/?p=2171"},"modified":"2017-06-28T05:59:39","modified_gmt":"2017-06-28T11:59:39","slug":"morning-thoughts-2017-06-28","status":"publish","type":"post","link":"https:\/\/udg.ehs.mybluehost.me\/morning-thoughts-2017-06-28\/","title":{"rendered":"Morning Thoughts – June 28"},"content":{"rendered":"

<\/a>Livestock<\/u><\/strong> –
\nEasy come, easy go for LC futures so far this week.\u00a0 Monday\u2019s surprising limit up reaction to a supposedly negative COF report on Friday was almost entirely reversed in yesterday\u2019s surprisingly weak action.\u00a0 In both cases, Monday and Tuesday, I really don\u2019t have great answers to explain the moves.\u00a0 If you recall yesterday I argued that the Monday rally might have been due to the fact that showlists might<\/em> have peaked here.\u00a0 For yesterday\u2019s sharp decline, I suppose I\u2019m left pointing towards the sharp weakness in boxes to explain the negative sentiment.\u00a0 As you\u2019ve likely seen, boxes were down sharply (choice down $4.66) and the choice-select spread is continuing its seasonal decline as well.\u00a0 Expectations now appear to be for the decline in boxes this week to be $10-15 in total (Friday-to-Friday).<\/p>\n

However, I think it is also worth keeping in mind that despite the weakness in boxes, estimated packer margins are still very solid.\u00a0 In fact, after looking at the seasonal view of estimated packer margins below, I\u2019d say they\u2019re more than just \u201csolid\u201d.\u00a0 I do find it interesting that there is a seasonal tendency for packer margins to decline during the first half of July, and given expectations for beef prices in the near future it would seem reasonable packer margins will follow this trend again this year.\u00a0 However, dropping from these levels would still keep packer margins pretty solid, depending of course on how cattle\/beef trade works out in the next few weeks.<\/p>\n

\"HedgersEdge<\/p>\n

I\u2019m told there was a labor issue at one of Tyson\u2019s beef plants yesterday.\u00a0 Details are sketchy on the reasoning, but whatever it is will likely result in yesterday\u2019s slaughter being revised lower and this could potentially weigh on the kill for another few days until it is resolved.<\/p>\n

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