Sort & Cull

Last week's market was a strange paradigm. The futures complex was supportive early in the week. But late in the week, when feedlot managers were able to keep fed cash cattle prices steady in some cases and actually push the market $1 higher in other sales, the futures complex was pulled back and nowhere to be seen when the market's fundamentals were performing.

But the real kicker of last week's market was packers were able to get a sizeable volume of cattle purchased with time. Last week's negotiated cash cattle trade totaled 60,389 head. Of that, 68% (41,260 head) were committed to the nearby delivery, but the remaining 32% (19,129 head) were committed to the market's deferred delivery option. Last week, Southern live cattle traded from $228 to $240, but mostly at $230, which is steady to $1 higher than the previous week's weighted average. Northern dressed cattle traded from $373 to $382, but mostly at $380, which is $1 higher than the previous week's weighted average.

As traders and cattlemen reappraise the marketplace early this week and try to determine where the complex could be headed in the next five trading days, I believe there are some hurdles challenging the market that did not pressure the complex last week. For starters, whenever there's a Cattle on Feed report, traders usually check it and embrace caution as many of them have been burnt one too many times by the fickle nature of those reports. Secondly, packers were able to purchase a sizeable volume last week in the fed cash cattle market, which gives them some more leverage moving forward. Although feedlot managers have lighter showlists this week, packers are desperate to see the fed cash cattle market trade lower as their margins continue to be pressured.

Although feedlot managers are current and have the ability to roll their showlists over if they need to, it may be tougher this week to trade cattle for more money, given that resistance pressures loom and because later this week the highly anticipated Cattle on Feed report will be released.

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Editor's Note: The July 1 Cattle on Feed and Cattle Inventory reports hit 2 p.m. CDT Friday. DTN will have a preview mid-week, followed by the report and analysis Friday afternoon.

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

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