Mackey: Packers Struggle to Preserve Margins
Packers have been in full margin preservation mode for some time. Idling back the harvest has successfully pushed wholesale beef higher, but that strategy has struggled to control the market. The harvest at 583,000 is 16,000 head smaller than the week previous and our smallest non-holiday slaughter. The Choice box is now at $307 and $15 off its lows. Yet, the cash market printed to new highs late week.
The North was successful in shaking off some early-week talk of $183, to trade Thursday at mostly $185-186 per cwt live and $292 cwt dressed, with regional business reported higher at $300 per cwt dressed. As the day progressed cattle feeders would share the buzz of multiple bidders and a wide range of sales.
Southern cattle feeders were slower to the switch, with futures higher the basis was not in support of steady trade—that would come Friday. On the back of a futures break, cash bids would be within $2 of the board and thus cattle feeders would move showlists at $185 cwt live, $2 higher when compared to the previous week. As a whole, Friday’s tally still had packers short of the previous week’s purchases by 30,000 head.
Looking ahead, cattle feeders will look to build off last week’s momentum, pricing cattle higher. Feeders will measure packer activity as a scramble for inventory and shift of leverage in their favor. Packers will continue be strategic with their purchases, balancing the harvest pace. Cattle will move from one area to another to support their needs and keep them from paying up as best they can.
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.
