Mackey: A Bigger Trade, A Bigger Spread
A bigger trade and a bigger spread. A few weeks back I commented on the North’s ability to negotiate a $6 per cwt. premium to the South. This week feeders were able to widen that spread to mostly $9 and in some spots $14!
The North maintains more buyers with fewer turn-in cattle, as a result their market trades primarily at $180-182 per cwt. live and $285-286 per cwt. dressed. Meanwhile, the South moves cattle at $170-171 per cwt. Northern buyers continue to make their presence known by freighting cattle North. The deficit between the two regions has led to some third-party buyers participating in the region to speculate in the Northern market.
The higher prices pulled more cattle into the trade this week. Week-to-date the volume sits at 146,043 head live and grid combined. This is 44,000 head more than last week. Week-to-date harvest is 625,000 head, 17,000 head under last week and 16,000 head under a year ago.
Packers continue to show great diligence in keeping their thumb on the slaughter pace. They are trying all they can to preserve some of their inventory until the seasonal increase in supplies begin to hit the show lists. We must ask ourselves, “Does that increase ever come?” The strong basis and extremely tight front-end supplies have allowed cattle feeders to pull cattle forward and market them earlier. One would believe the supply continues to stay manageable through the summer.
