Sort & Cull

The fed cash cattle market has been incredible during the past five weeks as prices have moved higher, scoring new record prices with every week. Since the week ended April 11, the fed cash cattle market has been able to add $28 to dressed prices and $17 to live prices in the just five weeks.

But while this is a joyful time for feedlot managers and cow-calf producers, packers are gut-full of battling red ink and have desperately tried to get hold of the market in numerous ways. And, while limiting throughput through reduced chain speeds has helped slightly, packers still are operating at far too thin of margins for their liking. But during the last three weeks, they've slowly been able to build up inventory by committing cattle through the deferred delivery option which will help them in the weeks ahead.

Just last week, the fed cash cattle market saw Southern live cattle trade at mostly $219 to $220, which is steady to $1 higher than the previous week's weighted average. But Northern dressed cattle traded at mostly $358, which is $2 higher than the previous week's weighted average. Both price ranges are record high for each region. And last week's negotiated cash cattle trade totaled 81,722 head -- with 60% (48,654 head) of the cattle committed to the nearby delivery, and the remaining 40% (33,068 head) committed to the deferred delivery option.

But with packers able to buy a sizable volume of cattle during the last three weeks for the deferred delivery option, it's likely prices could trade merely steady this week. It also bodes well for packers that this upcoming week will be a holiday shortened week for Memorial Day, which means a shorter kill schedule on their behalf, and the need for fewer cattle to kill.

No one would have ever guessed prices would have rallied in the fed cash cattle market $17 to $28 higher in the last five weeks, so at this point, anything could happen. But it looks like packers may have secured enough inventory to ensure prices won't trade higher this week.

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

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