Sort & Cull

If you paid any attention to last week's market, you knew that the cattle complex was a powerhouse that couldn't be tamed. Between the live cattle and feeder cattle contracts running to new contract highs last Friday, to the steady $3 gain seen in the cash market -- the market's strong fundamental basis continues to drive prices higher and it's likely the market has more -- much more -- in store for cattlemen in the next few months.

I was especially surprised to see how many cattle were committed for nearby delivery last week. Last week's negotiated cash cattle trade totaled 74,039 head, of which 90% (66,602 head) were committed for the nearby delivery, while the remaining 10% (7,437 head) were committed for deferred delivery. You read that correctly -- 90% of last week's entire commitment was booked for nearby delivery -- meaning those cattle will be pulled from feedlots in the next one to 14 days.

This news could mean a couple of different things for the market. First, it indicates packers are short bought and continue to struggle with short supplies the market has to offer. Second, it potentially means packers aren't as aggressive this current week in the cash complex as they have 90% of last week's entire movement committed to them and readily available to use. But electing to use this approach would also mean that they're risking being short bought in the weeks to come, which again leaves them vulnerable and likely to pay substantially higher prices, as opposed to keeping the market steady to seeing mildly higher prices this week.

Either way, it's an incredible time for feedlots to sell in the cash market as prices continue to trek higher and the bullish rumblings of the cattle complex only seem to get stronger. Of course, through this bullish run, there will be weeks where prices trend lower, but the outlook is onward and higher.

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

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