Sort & Cull

Last week's market was another unbelievable feat for the cattle complex. Early in the week, traders held the futures complex mostly steady as they were waiting to see what feedlot managers were going to accomplish in the fed cash cattle market. But as soon as prices began to be reported higher in the Southern Plains, traders launched the futures contracts on an unforeseeable rally that surpassed everyone's expectations.

To recap, last Wednesday cash trade began to develop in the Southern Plains at $230 to $232, which was $8.00 to $10.00 higher than the previous week's weighted average. Later in the week, Northern dressed cattle traded at mostly $380, which was $13.00 higher than the previous week's weighted average. The wild gains in the cash market gave traders all the support they could ever wish for -- and traders didn't squander the opportunity to advance the contracts. Throughout last week, June live cattle gained $10.83, August live cattle gained $9.53, August feeder cattle gained $11.33 and September feeder cattle gained $11.43. And last week's negotiated cash cattle trade totaled 78,808 head, with 83% (65,274 head) being committed to the nearby delivery, while the remaining 17% (13,534 head) were committed to the deferred delivery option.

So, the same old questions remain again this week. Will fed cash cattle prices be able to trade higher again this week or was last week's jump the tipping of the iceberg? Is the futures complex overbought and going to need to correct? Will packers dramatically reduce throughput this week as a way to reduce their needs from the cash market? And are consumers going to show-up to the meat counter again this week or are prices becoming too steep?

Truth be told, no one knows; only in time will we have answers to those lingering questions. But there are a couple of certain realities. First, the market has conquered a rally like none other, and if you're in the cattle business, I highly encourage you to think about all your options and to capitalize on this market to the best of your ability. Secondly, the market won't always be this good. So, make wise choices today with the extra added income from your sales to help better stabilize your business for the hardships that linger.

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

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