Sort & Cull

For the last four weeks in a row, the cash cattle market has traded higher as feedlot managers have been patient when marketing showlists and have held packers' feet to the fire. The feedlot managers know that when the tide turns, packers won't have any issue knocking $5.00 to $10.00 off the weekly cash price when the market leverage favors their position. So again, this week, we approach the market with the same question: Can feedlot managers get cattle sold for more money this week?

I was encouraged to see midday boxed beef prices were up notably Monday; choice cuts were up $2.79 at $305.37 and select cuts were up $2.72 at $290.33. This will need to remain the constant theme throughout the week if feedlot managers are indeed going to be able to advance prices again. It was also encouraging to note packers weren't able to get many cattle bought last week and weren't able to commit many to the deferred delivery option. Last week, Southern live cattle traded for $186, which is $1.00 higher than the previous week's weighted average. Northern dressed cattle traded at $296, which is $2.00 higher than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 59,356 head. Of that 82% (48,748 head) were committed to the nearby delivery, while the remaining 18% (10,608 head) were committed to the deferred delivery option.

But this week, higher prices aren't guaranteed in the fed cash cattle market as there are several hurdles to navigate. First, there will be the futures market direction. Last week, noncommercials jumped 16,744 contracts to total a net-long futures position of 52,851 contracts as of Oct. 1, which could pressure some traders into liquidating this upcoming week as concerns about the market being overbought surface. Not to mention, with traders advancing the nearby contracts to their highest position since late July, technical resistance pressures are strong.

Secondly, if cash prices are going to trade higher, it will be imperative that boxed beef demand remains strong and shows steady, stable support throughout the majority of the week. And lastly, packers won't be easily pushed around as they'll likely cut processing speeds to lessen their needs from the cash market and hopefully back up some supply.

It's been exhilarating to watch the cattle complex trade lately as technical and fundamental support have worked hand in hand to advance the market. But now that the market has recovered its lost position from the equity meltdown of early August -- traders will again be pressured to either take on current resistance or let the market soften and drift lower.

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

(c) Copyright 2024 DTN, LLC. All rights reserved.