Basis Trade, Cash Market and Market Ready Cattle Conflict
The downward trend in the cash fed cattle market was not as much of a surprise as how much we retreated in one week. The cattle feeders taking advantage of the positive basis, the trend for several weeks now, was again the catalyst for last week’s trade.
We saw some upward movement in the board during trade, however, packers didn’t have enough need for cattle to ever push the market past $121. As a result, most of the trade in the South was $5 lower than the prior week.
The North traded $192-$194 dressed, or $120-$122 cash, depending on location and delivery time. Some cattle feeders have traded further out in April to potentially take early advantage of the basis and market.
The question remains with a lack of participation to buy the April board, how far will the decline go?
The South is currently lacking in market ready cattle. Also in the South, the wall of cattle that is potentially weeks away from market ready, is diminishing due to aggressive marketing and great feeding conditions.
The calves in the North are still projected to start coming later than usual. Therefore, in the next few weeks the market has the best opportunity to hold steady, or add some dollars back.
