January 2024

By Cassie Fish, http://cassandrafish.com

At least 1k head have sold in Kansas for $176, $1 higher than last week, yet CME cattle futures are lower on the day. No doubt futures are correcting after reaching lofty overbought status. The bigger question is whether this cash cattle rally has more gas in the tank beyond this week or whether packers are just topping off inventories to get a stronger position heading into what is typically a light slaughter month. Besides Kansas, $275 has been bid and passed in Nebraska, and at least a load traded that way in Iowa yesterday. USDA had less than 2k head trading WTD, in a range of $175 to $176. Last week’ the market averaged just under $175.50.

Despite stronger cash prices in Kansas, February and April LC have traded red most of the day, so far posting an inside day. Yesterday’s lows are holding, so today’s action could be interpreted as inconclusive. 

Boxed beef prices are already lower on the week but this morning printed up 0.09 cents, breaking the fall for a minute. The choice/ select spread has narrowed in to $8.80, the tightest since 2022, looking at weekly data. The year-to-date cattle slaughter decline of 7.6% is largely responsible for the $27/cwt rally boxed beef values experienced this month.

But slaughter has normalized and plants are running well. Yesterday’s 127k daily kill followed Monday’s 125k which included 99k fed slaughter, a solid daily number. That doesn’t mean though that packers will see the need to run Saturday’s during Q1, they certainly haven’t so far except January 6. The talk is for 625k this week.

This afternoon the widely anticipated USDA Annual Cattle Inventory report will be released.

 

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