Sort & Cull

Packers Are Short Bought and Need Cattle

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
Monitoring throughput, boxed beef prices and packers' willingness to support the cash sector remains the best way to gauge the cash cattle market's ability to trade higher in the weeks to come. (DTN file photo by Jim Patrico)

We knew that last week's negotiated cash cattle market was a good one when prices jumped $3 higher in the North and $3.50 to $4.50 higher in the South, but come Monday -- when we were able to see how those cattle were committed in terms of delivery -- last week's market got even sweeter.

Last week's negotiated cash cattle trade sold 94,864 head. Of that, 85% (80,957 head) were committed to the nearby delivery, while the remaining 15% (13,907 head) were committed for deferred delivery.

With packers having to commit 85% of last week's purchase to the nearby delivery, that clearly shows they're short bought and need cattle. This shouldn't come as a surprise to the industry, as market-ready supplies of cattle are thin, but you never know how packers are going to handle the time between Thanksgiving and the New Year either.

Upon seeing how last week's market shook out, feedlots are eager to price cattle higher again this week and expect to see more demand from packers as they haven't been able to pad their deferred delivery commitments lately. New showlists appear to be mixed, higher in Kansas, but lower in Texas and Nebraska/Colorado.

Last week's negotiated cash cattle trade took place mostly on Wednesday. Southern cattle traded for $152 to $155.50, but mostly at $154 to $155 which is $3.50 to $4.50 higher than the previous week's weighted average.

Northern dressed cattle sold for $243 to $247.50, which was $3 higher than the week before.

Thankfully, throughput continues to run aggressively, so apparently packers are finding enough margin in the current market to justify paying higher prices in the cash sector. Monitoring throughput, boxed beef prices and packers' willingness to support the cash sector remains the best way to gauge the cash cattle market's ability to trade higher in the weeks to come.

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

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