Live Cattle and Feeder Cattle contracts on the Chicago Mercantile Exchange (CME) have been mixed since the middle of last week but had strong trading days last
Friday and this Tuesday. Market fundamentals are essentially unchanged and the market is looking forward to stronger fed cattle prices. For instance, the December Live Cattle contract rested Tuesday at $150.87/cwt., a $7/cwt. premium to last week’s cash market. The fed cattle supply situation suggests that this is justified based on the feeder cattle placement pattern. Carcass cutout values during August traded in a very steady range, skipping the anticipated, seasonal price rally ahead of Labor Day. This interprets as a negative demand pattern. However, the longer view shows that cutout prices this summer have been much more
stable than the prior five years. We need to acknowledge the record spike and subsequent decline occurring in 2022. Yet removing this anomaly year leaves us with strong seasonal summer price declines from May/June highs to July/August lows. For instance, the 2017 market saw a 21% price decline for the period and 2019 featured an 11% decline.
The June 2022 high CAB cutout value of $2.84/cwt. was just 3% higher than last week’s $2.75/cwt. value. Although the CAB cutout did not rally in the anticipated fashion ahead of Labor Day, the resilience of pricing since mid-June suggests stable demand.
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