The cattle packers continue with what some might call token bids. They could currently be buying cattle cheaper, but cash prices remain firmer from $110 to as high as $120 in the south. However, it remains tough to get a bid with cattle continuing to back up more than desired. Daily slaughter numbers have just climbed over 100,000 per day and are gaining slowly.
The cattle futures carry a heavy discount to cash. One note I might add, remember it is a futures market. The cash bids are higher because the packers appear to be creating some stability to the cattle market. It is hard to wrap your head around what that exactly means to the futures. Also, two of the major beef demand holidays are Mother’s Day and Memorial Day, and we are looking at them in the rear-view mirror. It is an opportunity missed as we can not fill the pipeline with beef with the recent struggles.
We still have the fear of how many cattle need to be marketed. Smaller placements of 78% for the month of April and marketings of 76% elude to that issue. On feed for April came in at 95%. It was nice to see a decrease, but the percentage of market ready cattle in that breakdown was a much bigger percentage comparatively. The Cattle On Feed report showed no surprises to prereport estimates.
Other topics still at large are the negotiated cash bill, the set aside proposal, and the newly released producer payment program. The cattle industry has a lot of wheels turning due to the recent events. I would welcome calls with questions regarding how this can affect us moving ahead. We will keep a close eye on the set aside program as that will change a few markets more critically. If it does get implemented by fall, we could see more fed cattle shifting back into a historically tighter window changing spring rally opportunities in my opinion.
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