The Cattle Range Home Page
October 11, 2017
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Another Big Kill as Carcass Weights Drop

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Another Big Kill as Carcass Weights Drop
Cassie Fish -- cassandrafish.com

The release of the actual slaughter data for week ended September 30 brought news of a new high for fed slaughter in 2017. Fed steer and heifer kill for that week totaled 523k, 2k head above the earlier high for the year made in September also and pushing packer plant capacity utilization to new highs.

The multiple +500 head fed kills have apparently managed to keep cattle marketings more current than many suspect, as steer carcass weights for that same week dropped 3 pounds from the prior week to 894 pounds, 15 pounds under a year ago. Both fundamental facts are constructive and give additional credence that the 2017 seasonal lows were made in Q3. So far, the big premium being held out as a carrot by Dec LC has not, as of yet, derailed cattle marketings or currentness.

This Week’s Negotiated Trade

Packers, reluctant to give up margin and faced with slippage in boxed beef values, have renewed bids steady with yesterday but appear content to wait until Friday afternoon to commence trade. Deliveries against the Oct LC contract has bears in hope futures will break and swing bargaining power to the buyer, allowing packers to fill up at no higher than steady money to last week.

Reports of tighter numbers in the north continue to surface and even though this week’s fed kill will be only in the 510k area, it’s getting more challenging to cover a kill this size with ease, week after week. This is considered a normal seasonal trend, unlike the prior 3 consecutive years- none of which were considered normal by any definition.
So regardless of tactics, fed cattle prices this week look to be no worse than steady and very well may trade $1-2 higher.
         
Deliveries Continue

Despite the solid fundamental news, bears caught short in the hole in Oct LC (and who also got caught in a basis shift) are peppering the Oct LC spot contract with deliveries. There have been 16 so far and another 5 are rumored to be tendered this afternoon. Oct is losing on the spreads today as the oldest long date moves forward and longs decide to move aside rather than risk getting caught.

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