Well, the boards are predictably wrecked. What a freakin' mess. Hope everybody has enough grass to ride it out for a while with the feeders you don't have sold/protected, but it's drying up quick in a lot of the country.
Here's the gloomy outlook from Cassie Fish's column yesterday for those of you who don't read her. I included the direct link to her column at the bottom so you can check her daily updates.
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Perspective
In Cattle Markets by The Beef & Cassandra Fish 08/13/2019
By Cassie Fish
When BSE was found in U.S. in late 2003, the future market priced the worst in 5 days. BSE instantly increased U.S. beef supplies by 10%, much more bearish than the loss of the Finney County plant. This begs the question, is one more day down tomorrow enough? Most active Oct LC has dropped $11.35 from last week's high and $13.12 under last week's cash price.
Of course, in 2003, there was no such thing as computer-generated orders determined by an algorithm, so perhaps it is not a fair or accurate comparison. Still, futures must still attempt to fulfill their role of price discovery.
Boxed beef prices are on fire, thanks to the huge loss in immediate beef supplies, resulting in a mad scramble by end users. Cutout prices were already stronger than a year ago and stronger than ever before at this level of production all because of power domestic demand. Look for sharply higher beef prices for weeks to come.
The packer has every incentive to kill as many Saturdays as possible, pulling out all stops to do so, in order to fill orders and capture sales realizations at expanding margins. Look for Saturday fed kills of 60k head, something that occurred during the week ended May 11 this year during a non-holiday week. The Saturday fed kill Memorial Day weekend was 81k head.
A circumstance such as this is a call to pull out all the stops operationally. A weekly fed kill of 510k to 515k head is achievable.
The fed cattle auction in Yankton, S.D. today saw cattle bring $100 to 107.75. There was a rumored bid of $170 dressed in Kansas but that has not been confirmed. It will be interesting to see how packers conduct themselves during this difficult time for cattle feeders. Lower prices are justified due to less demand. The obvious unanswered question is, how much lower.
Northern feedyards are still massively current and cattle are even greener than they've been, according to the latest grading data from USDA. Of course, Nebraska plants will likely be hauling many Kansas cattle north, which will slow down the pull-through of cattle in the upper plains and Midwest.
Tensions and anxiety continue to run very high. Yesterday's downright bizarre USDA corn report hasn't helped matters, though to cattle feeder, lower feed costs will help (if they actually materialize down the road).
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