By Cassie Fish, http://cassandrafish.com
It is early, but $121 bid and trade in Kansas by regional packers could well portend this week’s cash cattle price catapulting over $120 for the first time in a year. Most, if not all other markets have returned to pre-covid levels but it has taken cattle a very long time to do the same. A major packer ‘will call’ in Kansas at $120.
Boxed beef values are incredibly strong, supported by terrific demand and also help from very high pork prices. At mid-morning today, the choice cutout printed at just under $262, the last time it was this high was during the shortage created by COVD-19 production problems. Middles are super strong. Fat trim is rallying, as beef 50s are still discount to pork 42s by over $20.
Packer margins expanded last week to the widest point since last June and even though cash cattle will trade higher this week, the pace can’t keep up with wholesale beef values.
This week’s slaughter will increase and is estimated +650k depending on how large Saturday’s slaughter turns out to be since daily throughput is still compromised.
CME cattle futures like what they hear today and despite 45 deliveries tendered against the April LC contract yesterday afternoon, April is up over 100 points and took out the March high. There are rumblings a stopper could surface and demand deliveries. Could a trip back to the contract high made in February, $126.70 occur before expiration April 30? That feat no longer seems as impossible as it once did.
A glance at the futures quote screen today shows a classic bull market, with spot leading and the 2022 contracts barely higher on the day. It appears the April/June LC bull spread has finally bottomed after a second trip out to just over -300 points.
Yesterday’s impressive rally saw a 2,383 contract open interest increase and today may see another gain, giving credence to the bull market.
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