Following last week's disappointing cash cattle trade, the live cattle market and cash cattle market have their work cut out as the year nears its end. Coming off two weeks of lower cash cattle trade when both weeks could have easily traded at least steady is painful for the cash cattle market.
Last week's cash cattle trade was especially brutal to watch as cash cattle bids started to roll in as early as Tuesday morning, and cattle had begun to trade by Tuesday afternoon. Before the futures market had the opportunity to trade higher, the week's cash cattle trend was already set, and later in the week when the futures market rallied, the cash cattle market had already set its trading range for the week.
Looking at the next three to four weeks, pressure is anticipated throughout the cash cattle market. Packers are going to play their cards and hope to keep winding the cash market lower, but if feedlots play strategically, keeping the market's losses to a minimum could be attainable. Packers' No. 1 talking point through the Thanksgiving to Jan. 1 holiday is that they aren't going to kill many cattle. For each holiday-specific week -- Thanksgiving, Christmas and New Year's -- we can appreciate a lighter kill. But with recent data and ample upfront buying on the boxed beef front, packers need to continue killing cattle.
Last week's estimated slaughter is estimated at 665,000 head. That's 2,000 head fewer than a week ago and 1,000 head more than a year ago. Give or take 1,000 head for a market that processes upward of 650,000 head a week isn't a big market adjustment. And let's not forget to highlight that last week's boxed beef movement totaled a substantial 913 loads. When a huge movement of product is sold, packers know it's vital to continue processing, so that when supply is sought at a later time, they can fulfill the orders.
Nevertheless, feedlots have their work cut out for them as the year rounds out the last couple weeks of 2020. Waning boxed beef prices will continue to pressure the market throughout the year's end, but safeguarding profitability is key. Fighting for the market to trade at least steady is always better than seeing it drop $2 to $4 lower.
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ShayLe Stewart can be reached at firstname.lastname@example.org
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