The Cattle Range Home Page
November 22, 2017
. .
Fed Cattle Market... 
Stronger Cash & Stronger Futures

.
..

. .
Fed Cattle Market... Stronger Cash & Stronger Futures
Cassie Fish -- cassandrafish.com

Packers tipped their hand yesterday, the continuation of big fed kills and good demand inspired packers to replenish fed cattle supplies on a Tuesday, even at higher money. CME cattle futures, still very oversold, have reacted to the cash news with triple digit gains in spot Dec and most active Feb.

Cash topped yesterday at $120.50 in western Nebraska and traded in a range from $118 to $120.50 for the week. 

When the tabulations are done, it is likely cash will have averaged near or slightly below last week’s $119.35, despite a wobbly start on Monday.

It’s really next week that has garnered traders’ attention. Front end supplies of cattle are just green enough and tight enough in the north, to require more effort on the part of packers to stay covered. Yesterday’s strength indicates that cattle feeders perhaps hold more leverage than realized fully. Cash could be higher next week as packers procure inventory to fill a couple of more weeks of big kills, as the rib pushes to its top the week of December 4th. If cash is higher next week, then upside follow-through in futures seems a cinch.

It really is all about the consecutively large slaughter level during most of 2017, with over 1.4M cattle slaughtered YTD compared to 2016. This week’s kill could hit 575k head, very big for a holiday week and next week is expected to be 640K. A 575k kill would be the 4th largest Thanksgiving kill in 10 years.

Now that the industry has the most cattle on feed since 2012, it’s important to note that kill levels have already been nearing 2012 levels- especially considering some concerns over the packers’ ability to slaughter adequate numbers of cattle in a timely manner. The packing industry pushed its 2017 maximum capacity utilization to the highest percentage since 2008, a 9% increase since the low reached in 2015. Some companies have focused on adding labor and raising wages for over a year to accommodate the growing number of cattle available to slaughter. This strategy has paid off as packing industry profits have risen to record levels in 2017.

. .
. .

 .