Wednesday markets
Cattle markets are moving higher today, both the futures market and cash market have rallied. Cash trade has ranged between $103-105 in Kansas and Texas and Northern Plains feeders are pressing the dressed market higher, asking $168. Futures markets were all green, August live cattle were $1.70 stronger to $106.35 and the October contract was $1.27 higher to $109.27. Feeder cattle were also higher with August gaining 75 cents to $145.29 and September $1.32 higher to $147.95.
Packers have moderated slaughter levels to push the cutout higher and protect their margins, which are over $200 per head. Estimated slaughter so far this week is 347,000 head, which is equal to the same period last year; this week should come in around 640,000 head. Packers should be starting to fill Labor Day orders over the next few weeks.
Cassie Fish at the Beef said, “This cash cattle market rally is a classic example of pressure on packer margins as fewer market-ready cattle increase competition. The facts that carcass weights are enormous and beef demand is sluggish will provide no aid to the packer in a time like this.
“And for those small packers that operate in the 21-day spot window, their margins benefit more than the large packers. Cash cattle prices will be well supported and momentum strong until all, rather than some, packers get plenty of inventory around them.”
Boxed beef has had a nice rally gaining $6 over the past five days. Choice was trading today at $209.09 and Select was $195.99 on 182 loads. Fresh 90 percent lean beef was at $228.93 and the fresh 50s were at $60.61.
ShayLe Stewart at DTN reported today, “Cattle cash trade has surprised most as Wednesday morning’s Fed Cattle Exchange pushed cash cattle prices to $104 to $104.50, which is $4 stronger than last week’s weighted average. Meanwhile cattle contracts continue to rally.
“August live cattle prices jump to levels not touched since February 2020 and the complex is seeing the biggest gains in the nearby contracts which were lower than deferred contracts as traders believe that less uncertainty will plague 2021. A light trade has been reported in Kansas and Texas for $104-105, which is $4 higher than last week’s average. Trade has yet to develop in the North where asking prices are firm at $168 plus.”
Fish also remarked, “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. 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 packer’s 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.”
Feeder cattle
Turlock Livestock Auction Yard, in California held their 14th fall calving, bred cow and heifer sale last Saturday and had a remarkably good sale. Bred heifers sold between $1,800-2,625 and bred cows sold between $1,700-2,100. Max Olvera, yard manager, said this sale was extremely encouraging for the cattle business in California. — Pete Crow, WLJ publisher
