By Cassie Fish, http://cassandrafish.com
The cash cattle market keeps clawing its way higher, last week’s average $110.27 the highest since the week ending June 5 when the market averaged $112.39. Though arduous and perhaps disappointing, the cash cattle market is holding above less robust tops saw in July and August. The last month cash cattle prices averaged over $110 was May at $112.61, the third highest average price by month of 2020. With the cattle backlog mostly dispensed of and beef demand stellar and supporting solid-sized slaughter levels, the cash cattle market has a good chance to gain additionally this week.
Indications of a willingness to pay steady with last week in Kansas have already surfaced. With the choice/select spread over $20 per cwt, there is packer interest in buying cattle in Iowa and Nebraska and hauling them south. Something resembling increased packer competition could well be surfacing after a long absence.
Last week’s negotiated cash cattle total trade volume was light at 89k head. Last week’s holiday-shortened slaughter was 565k head, up 11k from 2019. This week’s slaughter is estimated to 666k head, short of last year’s huge 682k but at high end of the industry’s current practical maximum. The following two weeks also ought to see +655k slaughters.
The incredible rally in boxed beef prices this month in the face of record beef production, is showing signs of slowing. This year, boxes bottomed later than normal and appear to be topping a bit later than the last few years. Still, expect boxed beef values overall to hold together for another week before beginning their steep seasonal correction into the end of the year.
Packer margins last week were likely record wide. In a ‘normal’ December, packer margins narrow as boxes fall hard and cash cattle prices generally don’t. Carcass weights top in November also so less tonnage per head will be coming for the next 6 months until the seasonal low in late April/early May.
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