Last week's cash cattle market may have traded mixed -- higher in the North and steady in the South, but I'd argue that it completely missed the mark and ultimately let precious market-share pass it by as it didn't advance the market as aggressively as it could have.
We know that market-ready supplies of fat cattle will be extremely thin for the next month or so, but around Christmas and through the new year, supplies will gradually begin to increase. Feedlots know just how scarce their margins were during the last three years when showlists became backed up and cattle were fed for sometimes months longer than was hoped. So, in this season of opportunity and while the market favors their positions, feedlots cannot squander any time to push the market as aggressively as they can.
There seems to be an unspoken rule or an unwritten norm that cash cattle prices can only comfortably increase by $1 or $2 during any given week. When the market does advance by $3 to $4, or even $5 in one single week, the market's gain is almost seen as an unfathomable advancement that likely won't happen again. But I must raise the questions: Why is that? Why is it only 'comfortable' or 'acceptable' for the market to gain $1 or $2 on any given week, but when the tables turn and packers are in the driver's seat of the market, it's nothing see $2, $3, or even $5 taken away from the market each and every single week?
It's no surprise that it's easier for packers to work together than it is for feedlots, as there are only four major packers in the United States, and there are thousands of feedlots who are strategically trying to market their cattle week every week. But during this season of thin supplies of market-ready cattle, I'd encourage feedlots to think twice about accepting the first bid they receive because now is the time when they can advance the market and demand more, which won't always be the case.
ShayLe Stewart can be reached at firstname.lastname@example.org
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