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Kevin Penner: Still higher cash cattle prices?

10/25/2010 @ 2:42pm kevin@agtradertalk.com

After a sharply higher cash trade last week (cash cattle were up $5.50 to $102.50) the Call for this week is Steady/Higher with some contested ideas that we could see $103.00.

Packer margins have come out of the red in the past couple of weeks and that has allowed slaughterhouses to again be able to process cattle and make a profit. Boxed beef values have also increased steadily over the past two weeks. At the close on Friday, Choice grade Boxed Beef traded at $161.42. Supporting these higher moves have been both recent export news and the drop credit. 

Exports are showing considerable strength over last year at this time, up 74%. The drop credit, prices paid for off-all and hide, is also near record highs. All of these demand factors have recently combined to allow packers to be able to pay much higher money for fed cattle.

Some analysts are concerned we will not see $103 this week and are calling for gaps to first be filled in the chart. Continued strength in the boxed beef will lead the way for higher trade this week.  The futures trade at the CME Group will also be closely watched this week.  Recent highs made in the Dec Live Cattle contract will need to be tested or taken-out this week in order to lend solid support to the cash market.

As of 1:00PM on Monday, we have no reports of bids or offers and Dec Live Cattle futures are down .95 cents to $100.75.



Kevin Penner

Commodity Services, Inc.

Des Moines, IA


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