Packers Participating in Cash Market While Boxed Beef Prices Fall

 

By ShayLe Stewart, DTN/Progressive Farmer

5/18/2020

 

Last week wasn't any sort of "usual" for the recent trends developing in the cash cattle market. It was especially perplexing when you consider the market-ready fed cattle inventory is more abundant now than ever before.

 

Last week's trade developed early and popcorned throughout the countryside until Friday afternoon, raising prices upwards of $5.00 to $15.00 for live cattle and upwards of $30.00 for dressed cattle. Not only did packers pay more for cattle last week, they also bought 103,413 head -- all for delivery in the next two weeks. To add to the confusion, packers stepped to the plate and committed themselves to these cattle the same week boxed beef prices tipped lower. Last Tuesday was the last day choice cuts closed higher for the week and, from Wednesday on, they have closed lower since.

 

As always, we need to step back, look at the market through a broad perspective and ask ourselves why and what's to come next?

 

Given the uncertainty surrounding packing plants and their schedules, packers have to stay close to the knife as things can change in merely an instant. The one- to 14-day delivery of the cattle bought last week makes perfect sense, but also raises questions for their participation in the upcoming weeks.

 

Will packers be as aggressive in the upcoming weeks? Will they hold prices steady as their margins dwindle or will they whittle on prices as boxed beef prices start to correct?

 

With the Department of Justice investigating packers, there's no denying that packers have jumped onboard and been more active in the negotiated cash market...

 

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https://www.dtnpf.com/agriculture/web/ag/blogs/sort-cull/blog-post/2020/05/18/packers-participating-cash-market