Sort and Cull

Throughout last week's trade, the live cattle complex's behavior could be safely summarized as: Traders continue to want the market to trade higher, but without robust support from the market's fundamentals, a sideways chop was all traders could justifiably secure. And as the market has embarked on the new week, the same cautious tone has again surfaced.

So logically, the next question becomes: What does the market need to help push the contracts higher and potentially outside of its current trading range? The two logical points of support again this week will be strong consumer beef demand and undeniable support from the fed cash cattle market.

Last week, boxed beef prices chopped sideways throughout the week, with choice cuts averaging $379.38 (up $1.88 from the previous week's weighted average) and select cuts averaging $358.13 (up $3.37 from the previous week's weighted average). And last week's support from the fed cash cattle market was about the same. Last week, Southern live cattle traded at mostly $221, which is steady with the previous week's weighted average. Northern dressed cattle traded in a wide range from $345 to $350, which is mostly steady with the previous week's weighted average. Last week's negotiated cash cattle trade totaled 88,019 head. Of which, 80% (70,390 head) were committed to the market's nearby delivery, while the remaining 20% (17,629 head) were committed to the market's deferred delivery option.

While the market did receive subtle support from its fundamentals, it wasn't enough support to allow traders to break the complex outside of its current trading range. And again this week, it's likely that the market could merely chop sideways if support isn't more ambitious from either boxed beef prices or the fed cash cattle market. And as a side note, the monthly World Agricultural Supply and Demand Estimates (WASDE) report is set to be released this Friday, Oct. 9.

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

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