Carrying show lists the previous week paid off to the tune of $3 cwt. A combination of bullish factors fueled the market and cattle feeders were awarded.
Tighter inventories of market-ready cattle are leaving packers little alternative to placing higher bids. Last week’s 5-area average price was the highest in nearly eight years.
Packers waited as long as possible last week, grudgingly pushing the market higher with trades well into Friday’s happy hour and some even on the weekend.
Keeping the harvest under 650,000 for six weeks has allowed packers to set the tone for the market and keep some cattle feeders desperate to move cattle.
Cattle feeders and packers were again locked in a standoff last week negotiating prices for fed cattle. The tug-o-war continues this week with cattle feeders’ leverage growing.
In this time of growing leverage, feeders should adopt a New Year’s Resolution, “I will not sell on the first bid,” as evidenced by the Eastern feeder’s ability to resist initial offers of $248 and trade at $252.
After realizing historic profits the past couple of years, beef packers now find themselves in a similar position as their cattle feeding suppliers experienced - shrinking margins and reduced leverage.
