Mackey: Packer Activity Highest Since 2014
It was a big week all around and it started with the cash fed trade. After the initial market starters moved at $165— the remaining cattle in the South were left to benefit. Multiple bidders at $165 pushed the South market to $167 where the volume would begin to trade, with a few regional reports as high as $168.50.
That momentum followed North. Cattle feeders saw packer activity that hasn’t been seen since 2014. Multiple packers bidding, tying up cattle and competing for position. The North would see trade at $170-173 live and $270-272 dressed. Call the volume $170/$270 or $6 higher than the previous week.
No surprise, the Negotiated Volume comes in at 92,666 head, bigger than the week previous. Interesting to note, after the grids are added in the packer is still 2,800 head behind the week prior. Couple that with the big harvest of 651,000 head, they aren’t gaining any inventory. This is supported with continued reports of cattle moving from north to south and west to east.
Futures made new highs for all months. Only two other times in history has the contract traded higher than Friday’s spot high.
Looking ahead, though the boxes have printed higher, it will not be enough to offset the large jump in fed prices and most likely push the packers into the red. They will begin to talk about slowing the harvest pace and become more creative in their procurement practices. Do not be tempted with their market top offers. Tops will look to stifle price discovery and cut competition.
A native of Torrington, WY, Brodie Mackey joined Consolidated Beef Producers in the spring of 2013 after earning his B.S. from the University of Nebraska-Lincoln. Brodie’s focus at CBP includes customer development, cattle marketing and evaluation in Nebraska, Northeast Colorado, South Dakota and Wyoming. For more about Consolidated Beef Producers visit here.
