Mackey: Packers Executed Their Play Perfectly
The last time we saw a negotiated trade over 80,000 head was in November, which set up the following week’s more aggressive slaughter pace. If we remember from a few columns before, we noted that it would be interesting to see how the packers would manipulate the harvest to maintain control of the market. They have done just that keeping the harvest under 650,000 head for 6 weeks. In addition, they have relied heavily on their formulas and commitments, while filling in the gaps with desperate cattle feeders looking to move cattle out of muddy pens.
They executed the play perfectly this week. The North was the first to see any significant volume move on the notion cattle feeders wanted out. Dressed bids of $250, $2 lower vs the week previous, rippled through the marketplace establishing a weaker tone. By the week’s end the Live bids would round it out from $158 down to $156, call it $1 cwt lower. The south would move cattle at $156, also $1 lower vs their previous week. National volumes as of Friday have the packer purchasing 66,073 head of cash cattle, compared to last week’s 73,664 head. Early reports have most of the cattle already scheduled.
Looking ahead, cattle feeders should seek to advance prices on the principle of need. Packers buy head count and sell pounds. Carcass weights out Thursday showed Steers and Heifers down 5 pounds. Couple that with the harvest posted at 661,000 head, the largest kill since week of November 27th, the packers will need to secure more head count to fuel their pipeline and not burn themselves out of their freebies.
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.
