By Cassie Fish, http://cassandrafish.com
Last week’s large F.I. estimated cattle slaughter of 677k head was big and impressive. Applying a 22% non-fed slaughter, that leaves fed slaughter north of 520k head, big for July. The quicker packers move through the abundant fed cattle supply of July and August then front-end currentness will be maintained as the industry hits the tight Q4 supply.
On top of that, USDA choice boxed beef prices traded $1.58 higher this morning posting at $270.49, within $2 of the spring high. This on the heels of a big slaughter and in the middle of the ‘dog days of summer’ can only mean clearance to the consumer is brisk.
Both of these factors ought to be supportive of fed cattle prices which has experienced some seasonal weakness the past couple of weeks coming off the high for the year. Last week’s average was $2 lower, the national live price for steers $142.30. Cattle feeders continue to give the packer the advantage by selling cattle with time and last week sold 25k head that way out of 85k head total.
The takeaway here is that packer margins are once again inching outwards a bit as better-than-expected beef demand buoys boxes.
CME live cattle futures are experiencing overall liquidation as total OI eroded to 266k contracts open as of Friday’s close. Perhaps some funds are heading to the sidelines anticipating the well-advertised and highly anticipated recession. Prices are swinging in a well-worn trading range. Last April’s big gaps in August and October LC loom overhead like an invitation.
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