Are Packers Slowly Ceding Leverage To Feedyards?

Feeders were able to keep the market heading the in right direction during the trade last week. The south was another $2 higher at $112 on most of the cash trade, with a few bringing $113 on Friday. The north was also higher with dressed cattle bringing up to $180 and cash as high as $116.

Packers were still hunting front end cattle last Friday, knowing that feeders would have their sights set on a higher December board for the trade this week.  Packers were not willing to push last week’s market in fear of pricing all their committed cattle at a higher level, even if it cost them this week.  

Will the feeder be able to be even with the December board this week?  The cash market could have a slight increase this week, but likely won’t make a big jump. A slow and steady rise is better for the market than large jumps. 

The slow rise gives the packer the ability to keep their beef sales in step with the cash market. If the this continues the packer should be able to maintain a healthy margin, which gives them the incentive to run extra hours.  The extra hours help the industry get through the glut of cattle we currently see in the yards.