Sort & Cull

The last two months have been mostly favorable to the cattle market as feeder cattle prices grew substantially, cash cattle prices have been steadily higher, and the board has been willing to rally with the cash markets. But as the summer begins to look toward fall, there are some looming possibilities that could burden the markets' much-needed recent rallies.

Through a bear's-eye view, the cattle market looks ripe for a forthcoming correction. Feeder cattle contracts have rallied off their low established April 6 of $118 and have since bolstered the market $26 in three and a half months to $144. The rally has surpassed what most thought this summer could be, but as the complex continues to grind against upward pressure, toppy charts are forming. Thankfully the support through feeder cattle auctions has been strong, but we must remember that the fall market can easily get saturated with too many cattle to market and can quickly undermine the market's ability to rally. If technical support is starting to draw back, buyers will be cautious to not overextend and put themselves in a financial pinch.

Thus far, the live cattle and feeder cattle markets have mostly walked together to rally through July and August. But when looking at the calendar, one starts to get anxious about the live cattle market, knowing that a lot of its current strength is coming from Labor-Day buying. After the three-day holiday, will packers need to be as aggressive in the cash cattle market, as they have been for six weeks (when they bought either close to or right at 100,000 head each week)?

Paying close attention to how the market moves during the next few weeks is going to be critical. This week the feeder cattle market will be well-tested as both the Superior Livestock Auction and Western Video Market amp up to sell thousands of feeder cattle this week. DTN will share those sale results when they become available.

Tune into this week's Cattle Market News update on the DTN/Progressive Farmer Facebook Page, or click the link below: https://www.facebook.com/…

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

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