The Monday, July 20, reversal in the cattle complex came as a breath of fresh air to the marketplace, as it had been 15 consecutive days since the market had seen a higher daily close in the live cattle futures. But with the stark change in direction, the question now becomes: Was that the bottom for this move? Or does more pressure await?

Unfortunately, that's a question only time is going to be able to sort out; but there's a lot weighing heavily on the complex right now. For starters, over the last month, packers have quickly regained control of the vast majority of the market's leverage as they've not only been able to work fed cash cattle prices lower, but they've also successfully built-up inventory. Last week, Southern live cattle traded at mostly $237 to $238, which is $10 to $11 lower than the previous week's weighted average. Northern dressed cattle traded at mostly $377 to $380, which is $12 to $15 lower than the previous week's weighted average. Everyone in the cattle feeding business knows with temperatures this hot and supplies growing by the month, feedlot managers are going to be willing to let cattle go to keep themselves somewhat current.

One of the other factors that's negatively weighing on the complex is the seasonal boxed beef decline. Just last week, choice cuts averaged $371.21 (down $12.18 from the previous week) and select cuts averaged $359.95 (down $5.38 from the previous week), and the week's total movement of cuts, grinds and trim amounted to 585 loads. Until Labor Day nears, it's tough to tell how much lower the market could fade.

Needless to say, there are plenty of burdens for the market to face right now. More than anything, traders are desperate to see increased fundamental support, but it may be awhile before that develops again.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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