Fed Cattle Prices Off $1-2 As Packers Try to Hold Margin

Packers tried very hard to break fed cattle prices last week and had modest success. After blowing the doors off week before last, posting the third highest cash cattle prices of 2014, packers, with margins slipping red, pressed hard last week and with help from another reversal in CME live cattle futures, managed to take off an average of about a $1.50. And before we switch to the bearish rhetoric, of which there’s plenty for a Monday morning, last week’s kill came in at 592,000 head, about 7,000 head more than expected. Also, the actual versus estimated kill for the last full week in August was reported Friday at 4,000 head greater than the estimate. Apparently the mega bucks made by packers in August inspired yet
another week of bigger-than-thought-at-the-time slaughter levels.

​And bearish attitudes have increased this morning. Despite the 592k kill and a $163 paid in the still-tight, western Nebraska/eastern Colorado region, futures opened higher and have sold off, though only Oct and Dec LC has taken out last week’s lows thus far. Early action saw Oct LC unable to trade above its 10-day moving average and increasingly, futures traders are predicting Oct will test the $155 area. Technically, cattle futures are in the midst of a correction and short-term the fundamentals don’t currently point towards much else.

USDA boxed beef prices printed $1.61-1.81 lower Friday and more erosion is anticipated this week. There is also hints of a few more cows reportedly showing up for slaughter, though Friday’s cutter cow cutout clocked in at $235.49, premium to the select fed cutout at $234.54. Packers’ apparent “private inventory” of formulas and contracts appear to be giving them some advantage. This on top of the many flat price deals done for 2-3 week out front delivery, many above $160, are also helping packers fill in the holes and do all they can to manage during this time of overall historical small beef cattle numbers.

Despite today’s negative bias, it remains to be seen if there is enough of an increase in market-ready fed cattle and beef slaughter cows during the next 6-8 weeks to ease the difficulty of putting together slaughter schedules or filling end user needs.

         Feeders Not Cheaper Though

Cash feeders were red hot last week, up $3-8 bolstered by cheap corn, rains promise of wheat pasture and the nagging reality of short availability. And CME feeder futures, though modestly lower this morning, less than $2 off of last week’s all-time highs, compared with fats $5-6 off theirs. There’s not too much time left until fall feeder runs will be over so underlying support will continue to be rock solid and feeders will still be the leaders.

Packers tried very hard to break fed cattle prices last week and had modest success. After blowing the doors off week before last, posting the third highest cash cattle prices of 2014, packers, with margins slipping red, pressed hard last week and with help from another reversal in CME live cattle futures, managed to take off an average of about a $1.50. And before we switch to the bearish rhetoric, of which there’s plenty for a Monday morning, last week’s kill came in at 592,000 head, about 7,000 head more than expected. Also, the actual versus estimated kill for the last full week in August was reported Friday at 4,000 head greater than the estimate. Apparently the mega bucks made by packers in August inspired yet
another week of bigger-than-thought-at-the-time slaughter levels.

​And bearish attitudes have increased this morning. Despite the 592k kill and a $163 paid in the still-tight, western Nebraska/eastern Colorado region, futures opened higher and have sold off, though only Oct and Dec LC has taken out last week’s lows thus far. Early action saw Oct LC unable to trade above its 10-day moving average and increasingly, futures traders are predicting Oct will test the $155 area. Technically, cattle futures are in the midst of a correction and short-term the fundamentals don’t currently point towards much else.

USDA boxed beef prices printed $1.61-1.81 lower Friday and more erosion is anticipated this week. There is also hints of a few more cows reportedly showing up for slaughter, though Friday’s cutter cow cutout clocked in at $235.49, premium to the select fed cutout at $234.54. Packers’ apparent “private inventory” of formulas and contracts appear to be giving them some advantage. This on top of the many flat price deals done for 2-3 week out front delivery, many above $160, are also helping packers fill in the holes and do all they can to manage during this time of overall historical small beef cattle numbers.

Despite today’s negative bias, it remains to be seen if there is enough of an increase in market-ready fed cattle and beef slaughter cows during the next 6-8 weeks to ease the difficulty of putting together slaughter schedules or filling end user needs.

         Feeders Not Cheaper Though

Cash feeders were red hot last week, up $3-8 bolstered by cheap corn, rains promise of wheat pasture and the nagging reality of short availability. And CME feeder futures, though modestly lower this morning, less than $2 off of last week’s all-time highs, compared with fats $5-6 off theirs. There’s not too much time left until fall feeder runs will be over so underlying support will continue to be rock solid and feeders will still be the leaders.

The Beef is published by Consolidated Beef Producers…for more info click here.
​Disclaimer:  The Beef/CBP shall not be liable for decisions or actions taken based on the data/information/opinions.
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