Call the Market

Call me crazy, but just like some old-timers swear you can hear grass growing in the spring, I'm beginning to believe you can hear when the cattle market is building its legion and preparing to rally.

The cattle market has a nasty habit of humbling overzealous cattlemen and overly bullish market analysts alike, but if you look at the market's technical platform and study the recent developments throughout the fundamental side of the market, it's hard to deny that stronger prices and greater profitability are that farfetched.

I'm encouraged by the market's recent behavior and the data we believe to be true for the weeks and months to come. The market is being met with exceptional beef demand, boxed beef prices are making substantial daily gains, negotiated sales are growing in size and the futures market is oddly favorable for the summer months.

If you get the market down to its simplest core, the laws of supply and demand are hard to argue with. With hearty demand, packers are willing to turn up their chain speeds to chase rewarding boxed beef prices, and that works favorably for producers. It helps producers now as packers are actively working the countryside to procure cattle and are willing to pay a little extra for cash cattle if need be. But it also favors producers in the weeks and potentially months to come as front-end supplies are manageable and not burdensome to the market.

As the market sits idly at midweek, waiting for the week's cash cattle trade to develop, I'm hopeful that this week and the weeks to come will be big for the cash cattle market. Big, not only in price advancements, but also in the sheer number of cattle traded. Last week's cash cattle trade totaled 99,682 head. Of that, 64,241 head were committed for delivery in the next two weeks, while the remaining 35,441 head were scheduled for delivery in the following 15 to 30 days.

Looking at the most recent comprehensive boxed beef report for the week ending March 26, it's obvious that beef demand, both domestically and internationally, are stellar. For the week ending March 26, total loads of product amounted to 7,878 loads, falling second in recent years only to 2020 when demand was soaring due to COVID-19 induced shortages, but was only shy of breaking last year's unparalleled demand by a mere 160 loads.

How can today's demand hold a candle to the sheer need of beef that was desperately sought last year at this time when packing plants shut down and consumers loaded their carts in a panic?

Well, what can I say? Beef is king. It's a home-cooked meal that everyone enjoys, it's a sizzling steak at the finest restaurants and, in recent days, it's once again the first item listed on most shopping lists as friends and families prepare for the eagerly anticipated grilling season.

I'm optimistic that in the weeks and months to come beef demand is going to continue to thrive and feedlots are finally going to see a jump in cash cattle prices. If there's one market that's yet to recover from last year's nasty turn of events, it's the cash cattle market, and it's long overdue that the market bounces back.

But, as always, feedlots and cattlemen need to remember that the market isn't going to freely give them anything -- if they want higher prices, they'll still have to strategically market their cattle.

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

(c) Copyright 2021 DTN, LLC. All rights reserved.