Cash Cattle Prices Likely to Face Pushback From Packers


By ShayLe Stewart, DTN/Progressive Farmer 



Three consecutive weeks where the cash cattle market sees more than 100,000 head traded each week is nearly unheard of and as feedlot owners tally their showlists for this week, they question what the market will become.


During the last three weeks, packers have strategically been buying up cattle, and a considerable portion of their purchases have been for deferred delivery (where cattle are sold in the spot market but not picked up until 15 to 30 days later). The deferred delivery option is a tricky market for feedlots to navigate because, if they opt to sell "with time," they still have to feed those cattle until they're picked up, and it usually shorts the upcoming week's cattle market.


Nevertheless, as packers see that supplies of calf-fed fats are already making their way onto showlists, packers know supplies are soon to favor their position and the cards are going to be dealt in their favor. With the coming summer months, we can also expect showlists will grow, prices will weaken and packers will continue to see the largest percentage of the market's dollar finding its way into their bank accounts. Packers, feedlots and cattlemen all know how the cycle works and how timing plays a role in the market, but the gamble of guessing "when" is always the tricky part...