Sort & Cull

Live Cattle Market Braces for the Dog Days of Summer

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
The lull of summertime has belittled live cattle and cash cattle markets. (DTN photo by Jim Patrico)

The lull of summertime has belittled the live cattle market. Boxed beef prices waned after the Memorial Day Weekend, and they usually don't see much traction until Labor Day. The market's deterioration then consequently works its way throughout the board and ultimately to cash cattle prices.

Last summer was especially painful as the market had to endure the usual summertime blip in prices, but also had to get through a monstrosity of backlogged cattle supplies. Thankfully, this year the market sits in a good position with market-ready supplies, but again, the problem lingers in the fine details.

Last week, for example, there were 75,811 of cattle that traded through the negotiated cash cattle market. Of that, 62% (47,149 head) were purchased for the nearby delivery, while the remaining 38% (28,662 head) were purchased for the deferred delivery.

Packers are some of the keenest businessmen ever known to walk the earth. They, too -- like us -- know that market-ready supplies of cattle are going to grow thinner as the year progresses on. So, to avoid having to sacrifice their margin, they've been buying cattle with time each and every week to alleviate their reliance to the cash market. This becomes problematic for feedlots as the cash cattle market can never demand higher prices when packers don't need to purchase cattle. And with packers sitting on supplies for at least a month out, someone must ask, "when will packers need cattle?" and "when will the cash cattle market be able to demand higher prices again?"

Thankfully, this year's market has been blessed with phenomenal domestic and international demand, which has kept packers incentivized, but until packers have to step up and buy more than 70,000 to 80,000 head for the nearby market, lower prices may be the cash cattle market's norm.


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