By Cassie Fish, http://cassandrafish.com

Cattle traders, feeders and packers are all waiting to see where this week’s negotiated fed cattle market trades. Cattle feeders are generally priced at $160 and packers are hoping if they wait long enough, prices are no higher than $158. Some even think they can pull off steady trade, though given the small number of cattle purchased last week, that seems unlikely.

The sharply higher boxed beef market (choice is almost $15 higher than a week ago) begs for hours to be added so there is product available to sell at the higher values. So far this week slaughter levels have been hefty. Packers must buy cattle to cover slaughter, its just that simple. Sure, a new month will bring access to January forward contracts that can be relied upon, but higher cash fed cattle prices are highly likely for this week and all of 2023 when compared to 2022.

The decline in 2023 fed cattle supplies when compared to 2022 will be sorely felt by the packing industry and end users will be forced to adjust to about 5% less supply, just as they come off two consecutive years of record U.S. beef production. The supply contraction will be even more significant in the second half of 2022. It is expected to be fourth biggest year over year drop in beef production since 1979.

CME live cattle futures today are putting in a pretty robust performance with December and February up about one dollar, posting life-of-contract highs once again. Futures are discount to the asking price of $160 but are portending cash could trade $2 higher than last week’s price, etching out a new cash high for 2023 and the highest cash price for any December since 2015. In the last week of 2015, cash averaged $161.95 to only trade even higher in early 2016.

Choice boxed beef prices are hanging near $280 again today and it appears likely that this last week in December will end at a record high choice cutout price for the last week of the year. In late 2015, the choice cutout was just under $243 and one year ago, it was $265.

Happy New Year to all of our faithful readers and thank you!


Copyright © 2022 the Beef Read. All rights reserved

The Beef is published by Consolidated Beef Producers

Use of part or all of this blog for any reason without permission is strictly prohibited.  

Disclaimer:  The Beef, CBP, Cassie Fish nor NFC Frontier Capital Markets shall not be liable for decisions or actions taken based on the data/information/opinions. 

This material has been prepared by a sales or trading employee or agent of New Frontier Capital Markets and is, or is in the nature of, a solicitation. This material is not a research report prepared by New Frontier Capital Markets. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW.  PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS.  TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that New Frontier Capital Markets believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

Please follow and like us: