Last week's cash cattle trade was exactly what the doctor ordered. Seeing a $2.00 jump in cash cattle prices not only helped feedlots secure more leverage, but also aided as a much-needed moral boost.
Early in the week, as feedlots were evaluating their showlists and looking through their inventory, they realized an opportunity was on the horizon if they were strategic enough to take it. Feeders took their sweet time cultivating their showlists, letting the week drag on until Wednesday before trade developed. When Wednesday came around, cattle still hadn't traded and consignors to the Fed Cattle Exchange let the auction come and go without accepting any of the bids. After the auction's debut, packers realized that feedlots weren't going to cave and managed to buy some cattle out of the Southern Plains for mostly $103 to $103.50, $2.00 higher than the previous week.
Wednesday still wasn't enough time for the North. Northern feedlots held adamantly and patiently for packers to raise their bids, knowing that packers needed cattle, but were willing to roll their cattle over to the next week if prices weren't where they needed to be. As Thursday came around, packers once again upped their bids and dressed cattle sold for mostly $163, $2.00 higher than the previous week.
Heading into this week, and seeing what potential opportunities could be around the corner, feedlots could have another opportunity to rally the cash cattle market. Yes, packers are going to push back at any notion of higher prices and claim that weakening boxed beef prices are eating into their profitability, but did you see last week's boxed beef movement? Last week alone, packers were able to move 838 loads, indicating that there's newly available locker space and that more cattle can be processed.
Additionally, Monday's negotiated cash cattle report shared that, of the 105,118 head that packers bought through the cash market last week, 84,204 head are committed for delivery in the next two weeks, while the remaining 20,914 head are left for the following 15 to 30 days. This indicates that packers once again need cattle for their kill schedules.
The futures market could throw a wrench into feedlots' plans if lower prices are the week's trend. But if feedlots can unite and market their cattle unanimously, more leverage could be found.
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ShayLe Stewart can be reached at firstname.lastname@example.org
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