By Cassie Fish, http://cassandrafish.com
Despite 64 new deliveries and 45 retenders yesterday afternoon and some light cash trade in the south at $120, April LC continue to hold this week’s gains and are trading higher on the day. The on-line fed cattle auction saw some $121 trade south and $122.75 trade north. All of these prices are higher than last week and are the highest negotiated fed cattle cash prices since February 2020.
Some southern cattle feeders are frustrated by the premium futures market, which so far has portended higher prices correctly. They are peppering the April contract with deliveries, remembering the windfall basis of a year ago.
Meanwhile, beef demand is off the charts and cutout values are soaring. Domestic food service and retail sales are super strong as the industry heads into it’s peak beef demand time frame and export sales are beating a year ago- a true growth area for the U.S. beef industry. There is no talk of a top in the cutout because much of the beef being produced is already spoken for via sold-aheads or formula sales.
Unfortunately for the cattle feeder, the packing industry is pocketing most of the additional revenue as packer margins, which made a new high for the year last week are set to make another new high this week. Margins have blown out over $400 per head.
This week’s slaughter is estimated from 644k to 655k depending on who you ask. Slaughter will increase significantly in May and June.
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