The best laid intentions don’t always work out. After picking up some fed cattle purchases at cheaper money yesterday in Kansas, the negotiated fed cattle trade began to strengthen, especially in the north. By early afternoon, cash trades of $117, steady with last week and then $118 were reported and even with the higher money, packers did not get fully covered everywhere.
Today, packers have renewed their resolve to hold yet another line and bids above $118 and $188 dressed have yet to surface. Packers may roll the dice and wait until next week, rather than pushing any harder today.
The interesting part of yesterday’s action is the why. Those that have been around this business understand only one explanation is feasible which is that fed cattle supplies, especially in the north, are still quite current relative to the pace of fed cattle slaughter. Perhaps, a few astute observers have commented, the industry is even more current than perceived. This assertion cannot be proved however other than with more time.
Source: The Beef Read