Sort and Cull

Friday, Oct. 9, was a dynamite day for the cattle complex. The live cattle contracts ended the day well above their current trading range, and the feeder cattle contracts rallied more than $7 higher through the day's close.

Traders hoped that the fed cash cattle market would be able to trade steady, if not a tick higher. That slight chance was all traders needed to send boiling, red-hot energy throughout the marketplace, allowing the cattle contracts to rally aggressively.

And lo and behold, steady to higher trade was achieved in last week's fed cash cattle market. Before we dive into prices and delivery commitments, we owe every single feedlot manager who elected to wait until later in the week to trade their pens a round of applause and a genuine thank you. It was because of their due diligence that traders had the hope that the cash market could potentially trade higher -- and thankfully, it did. If feedlot managers had been glum throughout the week and opted to trade their cattle on Tuesday because they weren't willing to bet on the chance that prices could be higher, there's a strong chance Friday's rally wouldn't have occurred.

Last week, Northern dressed cattle traded at mostly $345, which is steady with the previous week's weighted average. And last week, Southern live cattle traded at mostly $222, which is steady to $2 higher than the previous week's weighted average -- and some live trade was even marked as high as $226. Last week's negotiated cash cattle trade totaled 67,701 head. Of that, 79% (53,354 head) were committed to the market's nearby delivery option, while the remaining 21% (14,347 head) were committed to the deferred delivery option.

As could almost be expected, some of the nearby live cattle contracts closed lower on Monday as traders hope to see fundamental support arise again this week and complement Friday's rally. It's too early in the week to get a feel for how this week's trade could pan out in the cash sector, but if feedlot managers are willing to wait the week out again, there's a chance that packers could be in need of more cattle. New showlists for the week are lighter in Texas and Kansas, but steady in Nebraska.

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

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