Packers are working to remain profitable, using basis for extended delivery, freighting cheaper inventory to areas of regional cash strength and running harvest at a snail’s pace.
A softer market for the first time in a month, but its a breather we have all been expecting. Keep an eye on the basis between cash and futures as packers will use it to gain leverage.
Packers continue to haul cheaper inventory to regions grinding higher and peel back harvest to stall the market. This is all friendly, one does not cut kills with peak demand on the forefront.
With cattle feeders in the driver’s seat, packers will seek leverage to price cattle for future delivery. They aren’t looking to do feeders a favor with the strategy.
Instability in equity markets proved a drag on futures last week, providing an incentive for feeders to trade on lower bids. Packers will continue to struggle with inventory going forward.
Beef packers show their willingness to rely on their captive supplies as they struggle to hold a lid on rising cattle prices. Tighter supplies in the coming weeks will force their hand.
Cattle feeders are firmly in the driver’s seat as cattle prices continue higher. Contract cattle and commitments to packers are dwindling and won’t last long.
