Mackey: Cattle Higher as Packers Show Their Inventory Hand

With depleted inventory and more normalized harvest schedules, packers entered the market in a big way igniting higher asking prices and signaling their inventory position. Trying to secure inventory and hobble the market, a few packers began early-week with “market top offers,” before bidding $1 higher with initial bids. Feeders would pass and work the week with newly found leverage.  As the bids would roll out, futures would grab new gears trading and holding modest gains.

The South conducted business at $175 per cwt, meanwhile the North would do business at mostly $277 per cwt. dressed and $177 per cwt live.  By late week all areas would see trade $2-$3 per cwt. higher with a few outside trades higher yet.

Most of the cattle belt is through the recent weather, however the impacts won’t be eliminated overnight.  Most forecasts are calling for above freezing temperatures.  A melt will be on and many feedyards, already facing tough pen conditions, will begin to see them worsen before they get better.  This will only add to the performance tonnage loss, perhaps what has continued to support the wholesale cutout.  Even after much supported harvest pace, boxes continue to hold their strength, printing higher Friday.  This should continue to support packer margins in the weeks ahead.

Looking ahead, the cattle inventory report will be out Wednesday.  It will be debated at length as most will be enroute to Cattle Con. Look for cattle feeders to keep their momentum with higher asking prices.