Mondays usually aren't the cattle markets favorite, as it can take some time for traders to get committed to trading, but that's not the story this week.
Upon seeing the corn market crash anywhere from $0.16 to $0.26 lower in its nearby contract and the wheat market trade steady to $0.08 lower in its nearby contracts, the live cattle market is happy to jump $1 to $2 higher. Last week's deterioration to the support plane of $136, which hadn't been seen since October 2021, was a significant loss for the market as it put the contracts well below both the 40- and 100-day moving averages. Cattlemen in the live cattle market are hopeful that the bottom has been found for its new trading range, but there's still a lot that could detail the market's upward quest.
First, peace talks have helped aid the live cattle market's stability, but talk is cheap, especially in times of war. If tensions grow stronger in Ukraine, the grain markets could rally again, which would likely cost the live cattle market all its recent success. Second, throughput could be an issue in the weeks ahead. It's ironic that when supplies of market-ready cattle are thin, packers need to "clean their coolers." As they buy themselves time and slow down throughput, they stack the cards in their favor as supplies casually build up and push showlists to favoring packers' positions. Last week there was a plant that was dark on Friday for cooler cleaning, and rumor has it that we can expect the next two to three weeks to be similar.
Nevertheless, feedlot owners are hopeful that the live cattle market's strength will weather this week's test of time and lend support to this week's cash market. New showlists appear to be mixed, somewhat higher in Kansas, higher in Texas and lower in Nebraska/Colorado. Feedlots know that packers have cattle already committed for this time, so their hopes for achieving higher prices is thin, but that doesn't mean that they can't hope for at least steady trade. If boxed beef prices show support like they did late last week, then there's a chance that packers could buy cattle for steady money as they're now making more on the meat.
ShayLe Stewart can be reached at firstname.lastname@example.org
(c) Copyright 2022 DTN, LLC. All rights reserved.