Sort & Cull

In about the best way imaginable, last week's market was a doozy. From the incredible rally in the cash cattle market to the run that the live cattle contracts had in the futures complex and to the continued support of strong beef demand -- last week's market was hard to complain about.

For those of you who were out calving or beginning to prep farm equipment, I'll quickly recap some of the week's highlights for you. For starters, the fed cash cattle market achieved new record highs in both the Northern and Southern Plains. Last week, Southern live cattle traded at mostly $210, which is $7 higher than the previous week's weighted average, and Northern dressed cattle traded at mostly $335, which is $10 higher than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 94,956 head. Of that, 88% (83,685 head) were committed to the market's nearby delivery, while the remaining 12% (11,271 head) were committed to the deferred delivery option.

Part of what was driving packers' ambition to be so aggressive in the cash cattle market was the continued support of strong boxed beef prices, which should continue to be well supported through the Memorial Day holiday late in May. And last but certainly not least, the futures complex also had a heyday last week as many of the nearby contracts ran to new highs as traders found ample fundamental support in the marketplace.

So, following the riveting week that last week was, the market is left with the wayward question: What can this week's market rightfully expect?

Although I believe the cattle market's long-term trajectory is bullish, I'm led to believe this upcoming week could face some challenges. For starters, the futures complex is facing some technical opposition following the highs made just last week. And if the cash cattle complex isn't able to trade higher, traders won't likely take it upon themselves to advance the market without full-fledged support from the market's core fundamentals (cash cattle prices/beef demand). Secondly, last week's CFTC report showed another increase in noncommercial positions, which brings some concern to the marketplace as the complex is again overbought. And last, but not least, packers did commit the vast majority of their cash purchases last week to the nearby delivery, which likely means that they'll attempt to pay no more than steady prices this upcoming week in the cash market.

So, although last week's market was utterly incredible, it's likely that both traders and feedlot managers will meet with opposition this week.

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

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