Sort & Cull
Packers Dramatically Cut Last Week's Cattle Slaughter to Only 584,000 Head
The cattle complex may have rallied all through Monday's trade as traders were relieved to see that placements were lighter on July 19's Cattle on Feed report, but there are some changing fundamentals at play that we need to discuss.
Last week's slaughter was estimated at 584,000 head, which is 17,000 head less than the previous week and 41,000 head less than the same week a year ago. Friday's Cattle on Feed report confirmed that we currently have more cattle on feed than we did a year ago, as total on-feed numbers amounted to 11,304,000 head -- up 1% from a year ago. So, if packers ruthlessly continue to keep processing speeds choked down to keep the cash cattle market from rallying, but also to help add support to waning boxed beef prices, one has to wonder what supply pressures could build by this upcoming fall -- especially with carcass weights teetering around 20 pounds heavier than a year ago.
Seeing processing speeds cut this time of year is seasonally expected, but when you take into account the additional weight in which today's cattle are carrying alongside the slight increase in total numbers, then concerns about timely throughput become a matter worthy of conversation. Typically, the market starts to see packers increase their chain speeds shortly following the Labor Day holiday, but more than anything it's consumer demand that drives when packers will increase productivity.
Last week, Southern live cattle traded at mostly $188, which is fully steady with the previous week's weighted average. Northern dressed cattle traded at mostly $310, which is $2 lower than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 71,749 head. Of that, 76% (54,696 head) were committed to the nearby delivery, while the remaining 24% (17,053 head) were committed to the deferred. New showlists appear to be mixed, higher in Texas, but lower in Kansas, and Nebraska/Colorado. Trade will likely be delayed until Wednesday or later again this week.
ShayLe Stewart can be reached at shayle.stewart@dtn.com
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