Ahead of seeing the totals for last week's negotiated cash cattle trade, I was certain that the number of cattle committed for the deferred delivery was going to be problematic, and that this week's cash cattle trade was going to run against some headwind. And while both still stand to be true, thankfully packers weren't able to get as many bought with time as I had feared.
Last week's cash cattle trade saw prices trend steady to $2 stronger, which doesn't sound bad given that the futures complex dove sharply lower on Thursday and Friday. The bulk of last week's business took place on Wednesday and Thursday, with just a little scattered cleanup reported on Friday. Southern live deals ranged from $138 to mostly $140, generally steady with the prior week's weighted averages. Northern dressed trade had a full range of $222 to $227, mostly $224, $2 higher than the previous week's weighted average basis Nebraska. But the displeasing component of last week's trade is that of the Northern cattle that sold for a premium to last week's average (some trading $4 higher) most of them were bought with time and committed for the week of Feb. 21.
In the weeks ahead, it's likely that packers continue to use this strategy in the market -- buy cattle with time to protect themselves from having to buy the week's entire need out of the current cash cattle market. Doing so will allow them to pump the brakes on the cash cattle market and lessen the chances of the cash cattle market gaining too much steam.
This obviously comes as a double-sided coin for feedlots. Taking a premium on the market at hand sounds enticing, but if today's premium shorts tomorrow's market, how much of a premium was it really?
If feedlots want to take the spring market to its highest potential, they'll have to work together in the cash market and demand greater packer participation, they'll have to be careful not to fall into the trap of desiring today's high at the cost of tomorrow and sell as few as cattle with time as possible. This week's cash cattle trade isn't likely to see much business until Wednesday, or potentially even later than that.
Showlists are mixed, lower in Kansas, and somewhat higher in Texas and Nebraska/Colorado.
ShayLe Stewart can be reached at email@example.com
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