By Cassie Fish, http://cassandrafish.com
The USDA monthly Cattle-on-Feed report that was released last Friday afternoon showed placements at 98 percent of the prior year, a couple of percent higher than analysts’ estimates or about 30,000 to 40,000 head more cattle. Total on feed is 3 percent higher than a year ago but a chunk of that increase is related to eight months of slow marketings. Packers are responsible for the slow marketings, keeping slaughter in check consistently.
Last week’s harvest was only 621k head, as packers pulled back production after the prior week’s 649k. Packer margins had improved significantly with the big break in fed cattle prices post-Thanksgiving.
Boxed beef prices have remained fairly stable and boxed beef sales volume was quite good the first two full weeks of December. But packers are aware that cash fed cattle prices, along with futures prices, have bottomed after a significant three month correction, and they are exhibiting care to not burn too much inventory. Afterall, as of Friday afternoon, packers had paid up but only purchased 50k head. Cash fed cattle prices are expected to trade higher this week, aided somewhat by a winter storm, including blizzard conditions, which struck Nebraska on Christmas. Snow and cold were noted in northeast Colorado and western Kansas today.
CME cattle futures opened lower on the opening in response to Friday’s report but the market has rallied impressively, posting an outside day with a likely higher close. That’s called ignoring bad news. This month’s COF report will be forgotten by tomorrow and the focus will be on this week’s cash fed cattle trade.
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