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Weekly Cattle Processing Reached Second Largest Of The Year

Futures prices seen hitting low, not cash.

USDA’s survey of packers found a 658,000 head kill for the week. That was just over our 655,000 estimate from the morning.

It is also the second largest kill of the year.

On a seasonal basis, there may be another 1 to 4 weeks ahead which could top the current 668,000 peak for the year. This week’s run was 3.5% over last year. That is just under the 4.7% increase over last year posted over the past six weeks.

As a reminder, cattle slaughter is not beef production. It likely won't be until July that we hit the largest beef production week (slaughter x weights).

Yesterday's monthly trade data release showed April beef exports at 253.571 million lbs., 16% over last year. April imports of 235.883 million lbs. were also positive. They were 6% under last year.

Cash cattle traded at better than expected pricing today. Active trade at $115 was noted in both the North and South at the time of this writing. We can't say if that will be the week's average at this point but the trade's appear solid.

On the dressed end we have some trades at $182 against active bids of $182/$183. Last week's trade averaged $110.55 live and $177.35 dressed.

The previous two weeks of $110 and $110/$111 trading was the lowest of the year. That is a normal occurrence based on the seasonal supply flow.

Allendale still reserves the potential for a few weeks ahead to still topple the current supply peak. We can't suggest the major cash cattle low has been made for the year. We can agree that futures have likely bottomed. As a reminder, our call is for August at $110 and October/December at $112. If we would discuss needed changes to the outlook it is likely the December is a little low.

There remains a lot of potential play in these live cattle prices, even without any new news regarding supply or demand. Beef packing margins are still the unknown at this point. Rich Nelson
 
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Rich Nelson Allendale Inc. 815-578-6161
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