Last Friday's Cattle on Feed Report was ideal: No surprises were unveiled, and analysts had near-perfect projections. But even so, Monday's market isn't thriving as one would expect after finding a "supportive" report. But this shouldn't shock any of us, as the market likes to react to earth-shattering news, and the Fed's announcement that it will likely increase interest rates again later this year is a tough reality for the livestock contracts to look beyond at this point.
This may lead you to ask: "Well, then why are you calling the report supportive if it's not actually having a supportive effect on the immediate market?"
Good question! There are a couple of things I'd like to point out regarding that remark.
First, subtle, consistent wins are the best victories for any market. It's fun to watch the contracts run $3 to $4 higher on any given day; however, to run a long-term race, it's consistency and stamina that must rise to the top in order to win -- and that's how one should view last Friday's COF report, as another consistent, confident win for the market to rest assured in.
Second, it wasn't just one category of the report that supported the cattle market's long-term outlook, but instead both the on-feed and placement categories did. When looking at the on-feed data, it was interesting to note that of the major feeding states (Nebraska, Colorado, Iowa, Texas and Kansas) only Kansas and Iowa saw greater year-over-year on-feed totals and only by a mere 1% in Kansas and 2% in Iowa. Then, when you looked at the report from a placement standpoint, it was also interesting that not one single weight division of placements held greater numbers than a year ago -- not a single one.
In conclusion, it may not feel like Friday's Cattle on Feed report is contributing much to the market given that the cattle contracts traded mostly lower throughout Monday's market sales. But just like we sometimes want to remind traders, there's a long-term game in the market being played, too.
ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com
(c) Copyright 2023 DTN, LLC. All rights reserved.