By Cassie Fish, http://cassandrafish.com
Negotiated fed cattle prices traded at $137 yesterday, after an early $136 and two major packers have gone to $138 bid in the last hour and $139 in the last 15 minutes. Many sellers are passing. $218 dressed in Nebraska has been bid. It appears for the first time in a very long time, there aren’t quite enough market-ready fed cattle around to fulfill packer needs. But because packer margins are still huge when compared to history and already planned large weekly December slaughter schedules need to be covered, packers are left competing and paying up.
This will be the market’s third week on the 130s and so far, cash is plowing through quickly. After spending an incredible number of weeks stuck at lower price levels, it’s awe-inspiring to watch the cash market accelerate with such ease.
So far packers have bought about 50k head, so it looks as if the negotiated cash cattle trade will continue on Friday, the day after tomorrow’s holiday.
December LC futures responded to the strong cash market by gapping higher this morning and holding gains thus far. December is gaining on all other contract months and the quote board reflects a classic bull market in tempo and structure.
Boxed beef values have stabilized for a moment, choice in the $279 area, but in another week or so the downtrend will accelerate and packer margins will contract more quickly. The summer 2021 low of $264 will be challenged and lower prices than that will likely be seen in Q1. Cash cattle prices on the other hand, will be strong relative to boxed beef values for the next 4 months.
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