Cattle Numbers Remain Very Tight, Expected To Continue
By Pat Lampert
In April, Jeff Rose and I anticipated the highs for the year hitting in the summer months. It’s happened maybe twice that I can remember in the last 40 years. We are experiencing that right now.
It feels like the CME has marked record highs every week since June. Not only has the CME broken through record highs, the fed cattle market (both Natives and Holsteins), feeder cattle and cull cows have as well this summer. Totally backwards of what is normal during June, July and August. They normally soften up this time of year and start moving up the end of September.
As Jeff mentioned in our last edition, the futures have been trailing cash by $20, and this month at least by $10-15. When you’re selling cattle for $235-$240 on the cash market, it’s hard to contract next April cattle for $225. Especially with record high feeder prices and inputs as high as they are.
Numbers are still very tight and will remain that way for quite some time. Weekly slaughter is running between 525,000-550,000 per week, down from an average of 600,000-625,000.
Hence, packers are a little nervous. Not only on the tight kills, but a cut-out value $20 less than they are paying for them. And this could have an impact on the smaller regional plants. Hopefully that will not happen. It definitely would not help.
According to the packing plants, the meat is moving domestically and exports are up and down depending on the week. High end restaurants are moving steaks at $80-100 per steak which is hard to believe.
The grocers have been selling choice cuts between $8.99 to $15.00 per pound, but high end cuts are costing $25.00 to $30.00. Grocers are using lower priced cuts to get people into the store and then everyday items are up 20 to 30 percent.
It’s never been more important to know your strategy on protecting yourself from the price swings and volatility of the market than now. There is a tremendous amount of money tied up in feeders and input costs.
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