Most of the negotiated fed cattle trade occurred yesterday at higher money in Texas, Kansas, Colorado and western Nebraska, topping at 120.50, $1.50 higher than last week’s practical top. No question that seasonally tighter fed cattle supplies fueled the up which, in turn, contributed to margin loss for the packers for next week. This good news is supporting only discount spot Feb LC today, which is staying green and widening its spread on the rest.
Futures generally defensive action is mirroring growing expectations that cash prices may have seen their high for this month as packers adjust kill schedules. February’s are always tough for the packer and kill cuts are a part of the program. Talk is circulating of cuts for next week and the week after, which includes a holiday. This week’s kill is expected to be 10k less than last week and next week’s 10k less than this week. This production step-down ought to provide some underlying support for the seasonally sloppy cutout.
Source: The Beef Read