The cash fed cattle market met expectations of climbing higher last week as the COVID-19 crisis continues, and the beef cutout continues to rise. Cash cattle in the South traded up to $120 per cwt. Some cattle traded for less than $120 on the Fed Cattle Exchange prior to the established cash trade, and then a few cattle traded below the $120 as trade was winding down for the week.
The North also participated in higher prices. Cash trade reached $120, with most dressed cattle bringing up towards of $190. Both areas continued to sell some cattle for out-front delivery.
The concern now is if the rise in cash price can last. Weekly harvest has remained unusually large, and the cutout is ahead of normal averages for this time of year. However, even with those two factors cash trade could decline.
Optimistically, we anticipated higher prices last week. Unfortunately, with the rise in the cash value – which sets the base price for all the formula and non-negotiated grids – we saw a rise in the number of formula and non-negotiated cattle turned into the packer. With the packer full of this type of cattle, the cash trade movement was difficult last week.
Lack of cattle moved on the cash trade is starting to back cattle up, and soon could collapse the hard gain in the cash market due to excess cattle in the yards.