Higher Cash Cattle; Boxes Bottom

By Cassie Fish, http://cassandrafish.com

Packers had no choice this morning. Consecutive weeks of small purchases forced packers to pay up about $2 today to replenish their cattle inventory. Texas and Kansas traded at $124 and $199 to $200 dressed in eastern Nebraska and Iowa. Western Nebraska is passing $124. January will see seasonally smaller slaughter, but still larger than the two holiday-reduced kills of this week and last and packers need fuel for production.

Thanks to monumentally large fed slaughter in December, front-end fed cattle supplies are tight. The USDA just reported the actual slaughter for week ended Dec 21 and at 526k head fed, it was the largest since 2001 for that week of December. No wonder boxed beef prices have been floundering with a record high level of beef production for December. Record profits incentivized packers to keep production elevated heading into the end of the fiscal quarter.

But boxed beef prices appear to have found their low this week, printing higher this morning. Further recovery is expected next week. End users too will be adjusting to seasonally less beef for sale in Q1. Some of the wholesale prices just reached will likely stimulate some great beef features in the coming weeks.

CME cattle futures along with most other markets today are dealing with escalating global tensions and a ‘risk off’ mentality. Cattle futures have recovered off of earlier lows and Feb and Apr LC managed to turn green. Apr LC found its footing today after getting pummeled yesterday, likely money flow. Only Jun LC slipped below yesterday’s low today.

The cattle market’s trading range has entered its third month. The market will likely close lower on the week this week but just as last week’s higher close had no effect, this week’s lower close probably will have no bearing either.

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