By Cassie Fish, http://cassandrafish.com
It is seldom in the cattle business that week like occurs. Negotiated fed cattle prices in Texas and Kansas have traded $9/cwt higher than last week at $180, making a new all-time high in the region. The south has been the markets’ weak link and CME live cattle futures have traded discount to cash in the south. North, cattle feeders are passing $187 bid. These prices are all-time highs.
As packers have been forced to compete for continued tight market-ready fed cattle supplies, prices have escalated. Beef demand is solid, sales last week were brisk and the only way to supply demand is by covering slaughter schedules. The packer has held leverage for years. Not anymore.
CME live cattle futures posted an enormous rally today, June LC leading with a 577 point gain, which filled a gap on the weekly continuation chart. At $174.90, June is still a $5 discount to cash. All in all, this is a remarkable, dynamic bull market.
Boxed beef values are increasing too, though not as quickly as the cattle and futures values. This morning the choice cutout was up $1.23/cwt at $307.07.
Today’s developments may surprise some but the numbers don’t lie. Any year when supply drops sharply, especially one coming off two record years of production, will see a big price jump. Eventually, the pendulum does swing the other direction. Cattle feeders have endured 4 years of challenges, foremost the struggle to get fed cattle harvested in a timely manner. The outlook for the next 18 to 24 months is one of tight fed cattle supplies, and high cattle prices but to the cattle producer, its been a very long time coming.
Could this be a short-term top building in the market this month? Possibly. But long term, there is much more bull market to come.
Copyright © 2023 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.
