Sort & Cull

Even though the cattle complex has seen some oddities in its seasonal behaviors this year -- feeder cattle demand extremely high in the first quarter and boxed beef demand seemingly stale thus far through May -- there's one seasonal dynamic that's currently playing out right before our eyes.

Over the last three weeks, packers have bought aggressively in the cash cattle market as they understand if they want to get ahead of cash cattle prices and see prices retreat, they'll have to do so by building supplies and lessening their dependence on the spot market. Outside of the week ended 3/24/2024 when packers bought 98,759 head in the spot cash market, the last three consecutive weeks have seen the biggest volumes of cash cattle sales in 2024. For the week ended April 26, packers purchased 92,548 head in the cash market. The following week packers purchased 92,693 head in the cash market. And just last week packers again purchased 83,747 head in the cash market with 67% of those cattle being committed for the nearby delivery.

And while feedlots are glad to have been able to sell their showlists easily over the last month and for steady or higher prices compared to the previous week(s), we also know at some point the tide will turn and packers will have enough supply committed to them they can move cash cattle prices lower.

Pinpointing when that time will come remains the task at hand, but monitoring slaughter speeds and beef demand could help give us a clue. Last week's slaughter was impressive at 622,000 head -- which is steady with the previous week's slaughter but 22,000 head less than a year ago. Beef demand has been slow thus far through May, but there is still time for the market to see demand increase. It was encouraging last week that choice cuts averaged $296.78 (up $2.27 from the previous week), select cuts averaged $288.06 (down just $0.72 from the previous week's average) and the week's total movement of cuts, grinds and trim was 651 loads. If slaughter speeds regress or boxed beef prices weaken dramatically, it's likely packers will pay less attention to the cash cattle market until feedlots become willing to deal on their showlist prices as opposed to being committed to trading them for more money.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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