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Markets Today...

Mike

Well-known member
Livestock:
Live cattle futures were widely mixed on Monday. February finished quite strong, but April was also able to post a new contract high today. The close was of interest, reportedly with a large professional still trying to goose February with a buy February sell April spread. The volume by that large professional was enough to overwhelm what was there for the Goldman roll pressuring April relative to February. The cattle slaughter figure released after the close confirmed the talk mentioned in the midday comments about some slaughter plants not operating. The 86,000 slaughter estimate suggests that it was more than a couple of plants. Packers have obviously backed off slaughter due to the lack of live supply after three weeks of relatively light purchases. The reduction in beef supplies made it easier for packers to raise prices to beef buyers, upping Choice prices a dollar and Select prices $2. The decline in the Choice-Select spread fits with the bear's case about larger near-term supplies amid backlogged marketing's. The January 1 on feed more than 120 days is estimated to be about 135% of the year ago number. Such a large number would seem to argue against higher cattle prices for the near term. The divergence in expectations is getting even wider. With another snowstorm forecast at the end of the week (although it has been softened in the latest model run), I have now heard estimates as high as a 20% reduction in beef supplies (death loss and weight loss) on the assumption the wintry weather pattern continues. That seems extreme (perhaps a mis-quote or an inflated figure just thrown out there for shock affect), but the weather pattern by those likely giving such estimates is "unprecedented in their lifetimes". I think that the weight data will be very important here in helping to dictate a direction. Thursday's report will show weights for cattle marketed after the first snowstorm, having to wait until next Thursday to get cattle marketed after the second snowstorm.
 

agman

Well-known member
Death loss has never been a significant factor in determining market direction. To the individual it can be a serious loss but is almost irrelevant when compared to a 98 million cattle inventory or 12 million on feed.

Weight loss can be a significant problem. Since 1990 only two years with severe and adverse winter weather, more severe than this year, have carcass weights declined by 52 pounds versus a normal winter high to spring low weight decline of 30 pounds. The additional 22 pound weight loss would cut production by an additional 3.0%. Whoever is suggesting beef production will decline by 20% is smoking dope or has zero experience with these types of conditions.
 

RobertMac

Well-known member
So one of the things producers could do to help themselves is to use smaller, more efficient cattle? Cost a lot of money to maintain a "feedlot heifer" as a brood cow! Lower cost on the front end...higher price per pound on the backend?!?!

"So simple like the jitter-bug, it plumb evaded me"
 

Jason

Well-known member
Agman, can you figure out why the Canadian packers would be so agressive right now trying to tie up steers?

I have a friend that is risking a higher than I think is safe dollar on some 7 wt steers based on his hope that this will turn the tide of lower feeder prices.

Cash is 88 cents here packers are offering 96 for April delivery.

The cash feeder market is getting hit hard, lightweight calves are starting to get dumped at significant discounts, and bred cow prices are starting to tank.

This one offer seems opposite to what the rest of the industry is seeing.
 
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