By Cassie Fish, http://cassandrafish.com

It’s been a good week for cattle market bulls. The negotiated fed cattle trade was active and at higher money. Week-to-date trade volume as of this morning totaled 80k head and yesterday’s price range on steers was $171 to $185, one of the widest in memory. The north has left the south in the dust as the spread between the two regions widens even more. The north has less captives and more competition to fill plants. And there are more fed cattle processing plants in Nebraska than any other state.

This week’s slaughter pace is 6k head behind last week at 498k head as of today, thanks to yesterday’s kill being revised down to 122k head. Saturday’s slaughter is expected to be light so this week’s total may end up at 630k at best. Boxes are a touch under $300 and about unchanged from a week ago.

CME live cattle futures have put in a bullish performance. Spot June LC made another life-of-contract high today and filled the gap on the spot continuation chart, finally reaching the April LC spot low. The long June LC short August LC spread made a new lifetime high today too.

The 2023 bull market continues and is only getting started. The second half of 2023 will see much larger YOY supply declines than the first half. Yes there will be a small seasonal increase in fed cattle supplies this summer but small is the operative word. Packers will likely slow production in July and August to attempt to back cattle prices down, but they will be challenged to do so in a meaningful amount. This year’s summer low may be a higher low than many expect and the discount in CME cattle futures would then prove to be too great.

The slaughter pace in June will be important to monitor. Today the USDA released carcass weight data for the week ended May 13 and steer weights are equal to year ago and were 1 pound higher than the low thus far established two weeks ago. This slower slaughter pace the last couple of months might be responsible for a slower seasonal carcass weight decline. On a positive note, the fed slaughter that week was 508k, equal to a year ago and the largest fed slaughter of 2023.

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