Shortfall

By Cassie Fish, http://cassandrafish.com

Week-to-date the F.I. cattle slaughter reached 301k as of today, the USDA revising down yesterday’s kill to 84k and today reported at 113k head. This is one of the largest, weather-related production losses in memory. Boxed beef values have increased, in part due to tighter production, though the rib and loin, continue under pressure this week. That weakness is limiting this week’s choice cutout gains while the select cutout is up about $8/cwt on the week.

The missed production has bought the packer some time, though one would expect various plants to now add a Saturday shift to make up missed hours. The negotiated fed cattle trade, for the most part, has been at a standstill this week, as feedyards dig out and prepare for plunging temperatures late this week and into Monday. Some parts of Nebraska are receiving snow now. Expectations are that cash cattle prices will trade higher this week, though who knows how much.

CME live cattle futures seem immune to the winter storm impact and continue to chop in a very well worn trading range. Nothing seems to be able to budge futures out of their tedious and tight pattern. Cattle staged an impressive rally off of the December 7 bottom, $10.85/cwt in February LC, but are now tapping the brakes as the 10 and 40-day moving averages converge where the market is trading. Apparently, this market needs more evidence before continuing the rally. There are a few bears around, but that’s a harder argument to win in a cold January.

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