Sort & Cull
The Problem With Selling Fat Cattle With Time
Last week's negotiated cash cattle trade was problematic and will undoubtedly cause issues in the weeks to come. As always, the problems lie in the fine details and it may seem far-fetched to say a movement of 88,624 head is problematic when the market has seen as few as 30,000 head trade in one given week, but it most certainly is a problem.
Last week's movement of cash cattle trade totaled 88,624 head. Of that, 55% (48,568 head) were committed for delivery in the next two weeks while the remaining 45% (40,056 head) are scheduled for delivery in the following 15 to 30 days.
The problem with last week's movement is that nearly half the cattle procured were scheduled for the delayed delivery. So, essentially only 48,568 head sold in the spot market -- 48,568 head versus 88,624 head is a big difference and exactly why I said the problems lie in the details.
With fat cattle supplies being manageable (tight in the North and more plentiful in the South), one of the quickest ways to undermine the cash cattle market's ability to rally in the weeks and months to come is to sell cattle with time. Packers only buy cattle with time when they know that supplies are going to be short, or when they know that the cash cattle market could rally. In the current market's scenario, both are true and both favor feedlots' positions, which cause packers angst.
You may wonder why in the world some feedlots sold cattle with time if it could cripple the market in the weeks to come. But it's always easy to point fingers after the smoke has cleared and things become more apparent than in the heat of the moment itself. Last week, when corn prices rallied and slaughter speeds were lagging behind, some feedlots grew anxious and began to sell.
Tune into this week's Cattle Market News update on the DTN/Progressive Farmer Facebook Page or by clicking the click the below to hear more about last week's cattle market: https://fb.watch/…
ShayLe Stewart can be reached at shayLe.firstname.lastname@example.org
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