Fed Cattle Rally Reaches Sixth Week
Cash fed cattle prices are posting significant gains at mid-week as the market rally runs into its sixth consecutive week.
Cash trades on the southern plains were reported at $103 to $105 per cwt., $3 to $5 higher. Nebraska and Iowa saw $105 live and $165 to $167 dressed, with many cattle priced higher. Cattle feeders have gained leverage in recent days as the supply of fed cattle tightens due to the drop in spring placements. Overall, the market has moved $10 higher since late June.
CME cattle futures are also higher. The August contract was up more than $1 at $106.10 at midday Wednesday. October Live cattle traded above $109 and December was above $112.
“Backlogged cattle are still around, though most of them appear to be cattle already committed to a packer, which is why there is quite a bit of difference in how each packer is behaving,” writes Cassie Fish in Wednesday’s The Beef Read. “Cattle slaughter has been reduced this quarter compared to a year ago, a little over 50k head including this week. The smaller kills are the packers’ way of rationing the smaller supply. Expect kills to fall short of a year ago the rest of the quarter, as heavier weights easily cover any shortfall and beef demand is soft relative to a year ago anyway.”
Boxed beef cutout prices are also trending higher this week, with Choice at $208.64 on Wednesday.
“This cash cattle market rally is a classic example of pressure on packer margins as fewer market-ready cattle increase competition,” Fish wrote. “The facts that carcass weights are enormous and beef demand is sluggish will provide no aid to the packer in a time like this.”