Sort & Cull

Ahead of the big Fourth of July celebration, the attitude throughout the cattle complex shifted. Both the live and feeder cattle futures began to trade lower, fed cash cattle prices traded lower, and feeder cattle prices did as well. Which now leaves everyone asking: What does this mean? What is the market trying to tell us?

While it may be normal to panic and wonder if the top is in for the cycle, market participants don't seem to be having a full-fledged meltdown; although the market traded lower through last week.

On one hand, it would be fair to believe the market's top is in. Based on Cattle on Feed report data, we know supplies are building in feedlots. Depending on what demand does this week, there's also a chance the season's peak demand is behind us with both Memorial Day and the Fourth of July in the rearview mirror. And let's also not forget to mention that seasonally this is the time typically when the market begins to see prices taper lower as we approach the dog days of summer.

But the truth of the matter is whether this is just a bobble and prices strengthen again in the upcoming weeks or months, or if highs scored in June are the cycle's top, a panic doesn't need to set in as we've yet to see any significant, widespread build-back in the cow herd. With hay prices as high as they are in much of the West, I personally believe we may be seeing pockets where some producers are slowly rebuilding herds. But as a whole I'm personally not convinced producers have elected to do so just yet.

What producers do need to have on their radar is fine-tuning their marketing strategy for feeder calves, deciding how and when they're going to market their cull cows, and be actively working with their accountant to know if they're going to need to spend some money ahead of the year's end.

Last week Northern dressed cattle traded at mostly $403, which is $5 lower than the previous week's weighted average. Southern live cattle traded at $255, which is $3 lower than the previous week's weighted average. New showlists appear to be about steady in Nebraska/Colorado, somewhat higher in Texas, and higher in Kansas.

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

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