Last week's market was just what the cattlemen needed after a brutal market in 2020 and a strenuous first quarter in 2021. Heading into this upcoming week's trade, the market could potentially see the same momentum that spurred last week's prices along. Demand was seen from every sector of the marketplace.
As we've often chatted about before, markets go through seasons of higher and lower prices; they ebb and flow over time as there are seasons when supplies are tight and demand is strong, but there are also seasons when the opposite can be said.
The exciting thing about last week's market was that the demand was widespread. Traders supported the futures market throughout most of the week, boxed beef prices kept rising sharply because of stellar consumer demand, cash cattle prices were stronger as packers needed cattle and feeder cattle were called $4 higher throughout the country.
Given what time of the year it is, a seasonal rally is likely to be supported in the weeks to come.
With boxed beef prices rallying, packers feel motivated and are being met with high returns as consumers grill at home and look forward to partaking in dine-in options again this summer. Consequently, when packers see higher returns, their aggressive buying in the cash cattle market strengthens; given the oddity of placements last year, there are fewer market-ready cattle now than what has historically been true. This is also why the second quarter is supposed to be fruitful for feedlots. The trickle-down affect then also supports a stronger calf market as feedlots see higher fat cattle prices and are willing to pay more for feeders entering their feedlots.
The biggest takeaway from the rally that's currently developing is that it could be sustained for a period of time. The market already sees how it's supporting the entire cattle market, not just one side of the marketplace.
Last week's negotiated cash cattle trade totaled 108,513 head. Of that, 70% (75,474 head) were committed for delivery in the next two weeks, while the remaining 30% (33,039 head) are scheduled for delivery in the following 15 to 30 days. The Southern Plains sold live cattle for $118 to $122, mostly at $121, which was $4 higher than last week. And in the Northern Plains, where market-ready supplies are tight, dressed cattle sold for $192 to $196, though mostly at $195 to $196, which was $5 to $6 higher than a week ago.
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ShayLe Stewart can be reached at shayLe.email@example.com
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