Sort & Cull

Last Friday, the cattle complex rallied as ample technical support poured into the market. Thankfully, at the start of this week, trader support has remained encouraging as both the live and feeder cattle markets traded higher throughout Monday's session.

There's an old market saying -- "feeders are the leaders" -- and in this case, that does seem to be true as the feeder cattle complex has been the first to rally and aggressively so. I think what's currently helping bolster the feeder cattle market is the tremendous demand both calves and feeder cattle are seeing in the countryside. USDA's Oklahoma Weekly Cattle Auction Summary revealed that last week, compared to the previous week and throughout the entire state, feeder steers and heifers over 700 pounds sold steady to $3 higher, but steers and heifers under 700 pounds traded up to $10 higher. Steer and heifer calves sold up to $20 stronger. And the South Dakota Weekly Cattle Auction Summary shared that steer calves traded anywhere from $2 to $7 higher, and heifer calves under 550 pounds traded $7 to $10 higher.

There is a chance, however, the market faces some pushback later this week as fundamentals (besides feeder cattle demand) haven't been supportive. Last week, Southern live cattle traded at mostly $185, which is $2 lower than last week's weighted average, and Northern dressed cattle traded anywhere from $287 to $300, but mostly at $290, which is $3 lower than the previous week's weighted average.

Last week's negotiated cash cattle trade totaled 74,093 head. Of that, 73% (53,980 head) were purchased for the nearby delivery, while the remaining 27% (20,113 head) were committed for the deferred delivery. And with next week being a holiday-shortened week where the weekly slaughter pace will be lighter than normal, it's not likely packers will be overly aggressive in this week's market.

Finally, it's also likely traders will brace themselves ahead of Friday's Cattle on Feed report as it's expected to show on-feed totals over 12 million head.

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

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