Cattle futures prices put on a surprise rally Monday, overcoming the severe bearish implications of a government report showing that a huge number of animals are on feedlots being readied for market.
While cattle closed mixed, with only limited advances on the Chicago Mercantile Exchange, this was far better than the limit declines many observers had expected.
"They opened under pressure but came back awfully well" considering the pressure from Friday's Agriculture Department cattle-on-feed report, said Charlie Richardson, an analyst in Denver with Lind-Waldock. This showed that farmers and ranchers had put 43% more cattle on feedlots during July than they had the year before.
While July, 1985, had been a particularly low placement month, the 43% increase was far above the 25% that had been generally expected.
"I think the strength displayed (Monday) was the market trying to indicate its overall tone," said Richardson, adding that it appears that futures prices are at the bottom of a cyclical decline.
There's an expectation, he said, that cash prices are going to remain strong despite the huge July placements.