The cash cattle market may not have performed as strong as feedlots had hoped it would have last week, but as feedlots acknowledge that next week will be shortened for business because of Thanksgiving -- do prices stand a chance at trading higher?
Unfortunately, as packers pad their deferred delivery commitments, it's unlikely that this week's cash market will trade higher. Last week's negotiated cash cattle trade totaled 102,284 head. Of that, 70% (72,043 head) were committed for nearby delivery, while the remaining 30% (30,241 head) were committed for deferred delivery.
It may be infuriating to see cash cattle prices chop sideways when it's possible the market could have traded higher, but if feedlots could simply trade cattle for the nearby delivery, as opposed to committing them to the deferred delivery, that would help the market tremendously and limit packers' ability to gain even more leverage in the spot cash market.
Even though cash cattle prices may have been trading sideways during the last two weeks, it is important to keep in mind that prices are currently trading at the highest level they've been at in the last seven years, and Nov. 9's World Agricultural Supply and Demand Estimates (WASDE) report shared promising price projections for the fourth quarter of 2022, and the first and second quarters of 2023. Quarterly steer prices for the fourth quarter of 2022 are expected to average $152, which is $2 higher than last week's weighted average. For the first quarter of 2023, steer prices are expected to average $153, and $154 in the second quarter.
With the U.S. dollar weakening from its recent highs, beef imports become less affordable, which could also affect imports in the months ahead -- a positive point for feedlot owners who are looking to see cash cattle prices increase to their fullest potential.
Needless to say, the holidays always cast some fickleness into the markets, as packers are notorious for either leaving the market painstakingly quiet or using the week's holiday nostalgia as an opportunity to secure supplies. Regardless of what happens this week and next in terms of prices, seeing as few cattle as possible trade into the deferred delivery commitment would be most helpful for feedlots in the weeks ahead.
ShayLe Stewart can be reached at firstname.lastname@example.org
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