Sort & Cull

Roll the Dice and Then Watch Throughput, Boxed Beef Prices

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
At the start of each new week, cattlemen, traders and everyone else in between ask themselves the same question: Does the market stand a chance at trading higher again this week? (DTN file photo by Jim Patrico)

As if 2024 wasn't enough of a bullish representation of the cattle complex, since the calendar flipped to the New Year the cattle market has rallied even more aggressively.

During the last two weeks, the fed cash cattle market has scored new record prices week after week, all while packers continue to pay up for cattle as they're short-supplied and want to capitalize on the money to be earned from these incredible boxed beef prices.

But at the start of each new week, cattlemen, traders and everyone else in between asks themselves the same question: Does the market stand a chance at trading higher again this week? New record-high prices are being scored week after week. But as we carefully watch the market's dynamics play out before us, I believe monitoring beef demand and throughput will be the biggest influential factors as to whether feedlot managers can move prices higher again this week or not.

Last week, Northern dressed cattle traded anywhere from $315 to $330, but mostly at $320, which is $5.00 higher than the previous week's weighted average. Southern live cattle traded anywhere from $200 to $202, which is $4.00 to $6.00 higher than the previous week's weighted average. Both live and dressed prices marked new all-time highs for both regions. Last week's negotiated cash cattle trade totaled 77,044 head, of which 75% (58,073 head) were committed to the nearby delivery, while the remaining 25% (18,971 head) were committed to the deferred delivery option.

The board has been fully supportive of the cattle complex's desire to trade higher. But on Monday, we saw traders act more hesitantly. They're going to see what develops fundamentally this week before they'll likely advance the contracts much higher. Monday's slaughter was estimated at 117,000 head -- which is 8,000 head more than a week ago, but incomparable to a year ago as the nation battled heavy winter storms early in 2024.

I understand packers were able to buy up some supply last week for the nearby delivery. But if they're going to keep the market from charging higher week in and week out, they'll need to get a lot more cattle committed to them, or drastically slash processing, which comes at a cost, as it will pressure end consumers as boxed beef prices will become even higher with a reduced kill schedule.

Nevertheless, we all know at some point, packers will gather enough cattle and this incredible rally, like we've never seen before, will cool down. But I'm personally not convinced packers have enough supply purchased just yet.

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

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