Cattle Call: Packers appear to have leverage back

Cash cattle this week was $196-199, continuing the downtrend in cash that we’ve seen all month. Packers have been operating at a reduced capacity for nearly a month. This week, there was news of a regional going down to 3 days per week. Packers appear to have leverage back in their favor. Demand is going to have to be what turns cash around.

Carcass weights were up 2 pounds for the week and 43 pounds over a year ago.

Live Cattle futures finished the week attempting to break out to the bottom side of the weekly range.  Bear spreads gained ground again this week, suggesting more rolling out of the front.   Open interest has been flat for the week. From a technical standpoint, the back months look much stronger than the front. Month end profit taking and consolidation added more pressure to the downside.

Feeder cattle futures were much stronger than lives for the week. I think tariff speculation is partially responsible. Feeder cattle prices in sale barns remain strong as seasonal supplies are lower, and grass season is upon us.

I don’t think the bull story is over in the cattle market, but producers will need the scales tipped in their favor again.

As always, outside markets contribute volatility and risk. United States’ economic concerns are still real. Record credit card debt and lower retail earnings are just a couple factors that paint a dark picture. I think that demand for premium beef products at the retail level is extremely resilient, but to what end?

Dallas—KKV Trading

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