Sort & Cull

The cattle complex didn't waste much time trading lower Monday as traders jumped into the new week with vigor and optimism. Both the live cattle and feeder cattle contracts have been trading between their 100- and 40-day moving averages, and this week the market will likely do the same unless something dramatically pushes the contracts one way or another.

But even with a strong start to the week, there are a couple of things that need to be on our radar for the weeks ahead. First, with next week being a holiday-shortened week for Easter and the labor union strike still happening in Colorado, there's a high likelihood cash prices will be steady at best this week. Especially when you take into account that last week some of the Northern dressed cattle were sold for the deferred delivery option, committed for the weeks of April 6 and April 13. Packers know if they want to keep the cash market from rallying in the weeks ahead, they're going to have to be methodical, steady buyers in the upcoming weeks and slowly begin to accumulate inventory around themselves.

Second, a broader, long-term industry challenge is that last week the market only processed 508,000 head of cattle. Yes, the unionized workers at the JBS beef-processing plant in Greeley, Colorado -- which can slaughter about 6,000 head a day -- are on strike right now and there were a couple of plants that were doing maintenance cooler cleanings. But from a long-term standpoint, it's frightening to see the weekly slaughter capacity drop so dramatically. Last week's kill of only 508,000 head is the smallest on record aside from holiday weeks and disruption of COVID. Which once again leads to me to the looming question: What's going to happen to the cow-calf producers when some level of buildback happens and the market knows that it no longer has to operate at 600,000-head-kill weeks?

In conclusion, yes, Monday closed stronger as traders were motivated to help drive the contracts higher; but with choppy boxed beef prices and potential steady if not somewhat lower cash prices, the market could face challenges later in the week.

I don't think we can stress it enough right now -- please continue to pray for those ranchers who have been affected by the fires in Nebraska -- and pray for rain!

For related DTN stories about drought and Nebraska fires:

-- Ag Weather Forum, "Early-Spring Precipitation Trends Bolster Drought Outlooks," https://www.dtnpf.com/…

-- "Nebraska Wildfires Scorch 820K Acres," https://www.dtnpf.com/…

-- "NE Wildfires Rage Across 740K Acres," https://www.dtnpf.com/…

-- Pasture to Pen, " Resilience Alone Won't Get Farmers Through All the Challenges," https://www.dtnpf.com/…

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

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