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Kevin Penner: Cattle market strengthens

Cash Cattle showed considerable strength last week
trading
at $93.00 - $93.50 / cwt and $148.00 - $148.50 on a dressed basis. A
midweek
rally at the CME Group emboldened feedlots to hold
out
until late in the week. A Thursday rally then allowed cash trade to occur
at a
higher level, despite calls for lower trade at the beginning of last
week. 

This week, we see similar circumstances. A lower
close on the
Board last Friday and a failed rally on Monday of this week. This does not set
the
stage for a higher cash trade. However, Cash Cattle are called Steady to
$1 Higher
this week and another day of strength in Chicago may be what again
sparks this
week's trade.

Positive factors lending support to the idea of a
higher trade
this week are:  continued strength in the Boxed Beef market and tighter
showlists for the week.  Beef prices are reported to be at a 1 1/2 week
high and tighter showlists means less cattle will be offered for sale to
Packers.  A look at the Oct and Dec futures contracts trading at 95.50
and
97.50 tempts feedlot owners to hold cattle for a few weeks. 

Average packer profit margins are reported to be at a loss of
$14.50 per head. This set-up will likely result in smaller Slaughter
Totals
this week which could temper some of the demand seen by buyers of cash
cattle.
Cattle are offered at $95 as of today and there have been no reported
bids this
week.

 

Kevin H. Penner

Commodity Services, Inc.

1901 NW 92nd Court, Suite B

Des Moines, Iowa
50325

(515) 251-3100 Office

(800) 274-2074 Toll Free

(515) 251-3133 Fax

(515) 770-1619 Mobile

kevin@commodityservices.com

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