Sort & Cull

Last week was pressuring for the cattle complex as the futures market waved its white flag and traded lower throughout most of the week. The other stinging point about last week's developments was that packers were able to gain leverage in the fed cash cattle sector.

Southern live cattle traded at mostly $242 last week, which is mostly steady with the previous week's weighted average. Northern dressed cattle traded at mostly $383, which is $2.00 lower than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 73,490 head. Of that, 76% (55,506 head) were committed to the market's nearby delivery option, while the remaining 24% (17,984 head) were committed to the market's deferred delivery option.

And combine the development that packers were able to successfully build up supply around themselves, all while running a historically low slaughter speed. Last week's slaughter reached just 487,000 head, down 60,000 head compared to a year ago -- and one can quickly see how packers are slowly but surely gaining leverage in the marketplace.

In the upcoming weeks, the market will be tried as packers will aim to continue to press fed cash cattle prices lower and won't run any faster of a chain speed than what's absolutely necessary. While packers not only have to manage the supplies they have now, they're also keenly aware that further into the third quarter of 2025 -- and most definitely into the fourth quarter of 2025 -- supplies will tighten again, and the pendulum of who possesses most of the market's leverage will likely swing back to feedlot managers. So, in the meantime, packers will likely focus on controlling what's controllable for them, what price they pay for fed cattle and throughput.

It's unlikely that the seasonal trend that we are expecting to see in fed cash cattle prices and throughput will affect the feeder cattle market. Because feedlot managers know all too well at this point that supplies aren't going to become any more abundant any time soon, and although it felt like five months ago, feeder cattle prices were high, looking back now, those prices seem like a deal.

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

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