Sort & Cull

This upcoming week's cash cattle market is going to be hard-pressed to trade higher as packers are playing every trick in the book to hopefully ease the cash cattle market's momentum. During the last five consecutive weeks, feedlot managers have been able to push the market higher. But with packers dramatically cutting throughput last week and having been able to buy some cattle with time in last week's market, feedlot managers have their work cut out for them in the week ahead.

Last week, Southern live cattle traded at mostly $187, which is $1 higher than the previous week's weighted average; Northern dressed cattle traded at mostly $296, which is fully steady with the previous week's weighted average. Last week's negotiated cash cattle trade totaled 92,611 head. Of that, 80% (74,479 head) were committed to the nearby delivery while the remaining 20% (18,132 head) were committed for the deferred delivery. And, last week's slaughter is estimated at 586,000 head -- 25,000 head fewer than the previous week and 30,000 head fewer than the same week a year ago.

Thankfully, feedlot managers sit in a unique position where they can afford to play 'hard ball' and roll some of their showlists over if prices aren't what they desire. But what concerns me most about the current market dynamics at play is boxed beef demand.

Look at the chart that accompanies this blog and you can clearly see that, compared to years past, boxed beef prices are high -- extremely high! And, with consumers already battling inflation everywhere they turn, how much more can they really afford to spend on beef before prices simply get too high and beef consumers turn to other more affordable proteins?

As always, time will tell, but as we watch the weekly battle in the cash cattle market between packers and feedlot managers play out, we can't overlook how these dynamics affect consumers either.

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

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