Sort & Cull

Can the Cattle Rally Carry on if Beef Prices are Weakening?

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
The cattle complex thrived last week, but if boxed beef prices continue to trade lower this week, cattlemen and traders may be hard-pressed to get the market to trade higher again this week (Photo by DTN ProphetX photo).

Last week's market for the cattle complex was incredible. Significant gains were seen throughout the futures complex, and the fed cash cattle market outperformed what many expected it would do. But as the market tiptoes into this new week, I'm concerned that the market's aspiration to continue with its upward trek may be limited if boxed beef prices don't print higher.

To put last week's achievements into perspective, let me highlight some of the key takeaways. Last week, the October live cattle contract gained $1.28, the December live cattle contract gained $1.28, the October feeder cattle contract gained $3.18 and the November feeder cattle contract jumped $3.93 throughout the week. The fed cash cattle market's trade may have been delayed until Thursday, but once again, feedlots' patience paid off as prices were marked $2.00 to $3.00 higher than the previous week's trade. Southern live cattle sold for mostly $185, which was $2.00 higher than the previous week's weighted average. Northern dressed cattle traded for mostly $294, which was $3.00 higher than the previous week's weighted average. And even though the fall run is underway for feeder cattle, buyers were aggressive last week in the markets and most weight groups of feeder steers traded higher.

So, from a cattleman's perspective, the week was tremendous as support was plentiful from nearly all angles. The only hiccup with last week's trade was boxed beef prices. Throughout the week, choice cuts averaged $298.98 (down $2.94 from the previous week) and select cuts averaged $284.48 (down $5.71 from the previous week).

If boxed beef prices continue to trend lower, packers will likely cut throughput until prices begin to recover. This is problematic for feedlot managers as that will likely mean that they'll be less aggressive in the spot cash cattle market. And it could be problematic for U.S. beef consumers as they're already strapped for cash and struggling in today's economy.

Not to mention, the cattle complex will likely retreat later in the week if the longshoreman strike at the East Coast and Gulf ports does happen. Read more about the potential port strike here: https://www.dtnpf.com/…

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

Comments

To comment, please Log In or Join our Community .