Sort & Cull

Is Steady Cash Cattle Trade Possible This Week?

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
Just because the spring high could be in for the season, that doesn't mean the cash cattle market can't trade higher in the weeks to come. (Photo by Elaine Shein)

Now that the cash cattle market has been trading lower for the last several weeks, few would argue that the spring high hasn't been seen. However, just because the spring high could be in for the season, that doesn't mean that the cash cattle market can't trade higher in the weeks to come ... if feedlots play their cards right.

Last week, I was encouraged when Northern feedlots elected to wait to sell their pens until Thursday. Southern feedlots began to trade cattle on Wednesday, but Northern feedlot managers knew that, if they stood any chance at trading their cattle higher, they'd have to patiently wait the week out and see just how in need of cattle packers were on Thursday/Friday. And even though prices still traded $1.00 lower in the North last week, trading cattle for $1.00 lower sure beats trading them for $2.00, $3.00, $4.00 or even $5.00 lower.

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It's little market dynamics, such as Northern feedlots' subtle decision to wait until Thursday to trade their cattle, that lead me to believe this market could potentially trade cattle steady. Yes, the seasonal high is likely already in, but the big question now is: what will the spread between the spring high and the summer low be?

Feedlots may not be able to pressure packers into paying substantially more for cattle in this timeframe, but they can somewhat protect the downside of the market by simply not selling cattle into the deferred delivery option, and by potentially waiting the week out to obtain the highest price possible for that week. It's easy to look at any week that's trading higher and say, "That's a win!" But a $1 lower trade can still be a win when feedlots keep the market from trading $3.00 to $5.00 lower.

Last week, Southern live cattle traded for $170, which is $2 lower than the previous week's weighted average, and Northern dressed cattle traded for mostly $280, which is $1 lower than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 81,474 head. Of that, 71% (57,882 head) were committed to the nearby delivery while the remaining 29% (23,592 head) were committee for the deferred delivery.

So, while it's yet to be determined what prices will shake out to be this week, know that even seeing prices trade steady to $1 lower can mean that the market accomplished something positive.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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