Cash Cattle Rally Takes A Breather
Cash fed cattle sold lower in all regions this week, but all industry stakeholders believe the historic rally is far from finished. Barring the arrival of a black swan, the short supplies of cattle will continue to provide producers with marketing leverage.
Moderate volumes sold in the North this week, mostly at $185 per cwt., or $5 lower. Dressed cattle sold at $295 to $296 per cwt., $4 to $5 lower. Trade in the South was called light to moderate at mostly $182 per cwt., $3 to $4 lower.
Wholesale beef prices continued a historic run higher, helping keep packer margins in the black. Choice boxed beef closed Friday at $343.09 per cwt., $10.16 per cwt. higher for the week. Select boxed beef closed at $310.95 per cwt., $5.24 higher.
Feeder cattle traded from $7 lower to $6 higher while calves sold $5 lower to $8 higher.
At the CME, firming cash market action seemed to boost cattle and feeder futures Friday, with the expiring June live cattle contract rising 77.5 cents to $178.35 at the close. Most-active August rallied 65 cents to $171.725; the settlement price represented a weekly slide of 12.5 cents. August feeder futures settled at $234.925, which marked a daily advance of 80 cents and a weekly drop of $4.075.
Analysts say a seasonal drop from the anticipated late spring-early summer high in fed cattle prices is broadly anticipated. Similar historical years also saw cattle price suffer such a decline. The big question is how far and how long the decline will last. Most analysts are cautiously optimistic on this point, especially if grocers continue featuring beef with regularity. Slow packer operations in recent weeks have apparently increased the supply of market-ready cattle in feedlots, thereby reducing feedlot managers’ bargaining leverage. Hot, dry weather over the Midwest could also intensify the usual summer demand doldrums after Independence Day.
