Live Cattle Down This WeekPosted 08/14/2019 8:28AM CT |
The big news over this past week is that Tyson packing plant in Kansas went up in flames last Friday. This led to the market opening limit down on Monday, for both feeders and live cattle contracts. The market showed some follow through yesterday with feeder cattle futures and live cattle futures almost going limit down again when the market had expanded limits. It appears that the market is assuming that the other plants will not have the capacity to take on the increase in market ready cattle. The redistribution of roughly 30,000 head of cattle is going to put a burden on an already taxed packing capacity, which is going to lead to a backup in market ready cattle. If there is any bullish news to be taken out of this, it is that the packers are going to increase demand for the beef which could offset any cash loss. The USDA estimated cattle slaughter came in at 116,000 head yesterday. This brings the total for the week so far to 231,000 head, down from 237,000 last week, which means that slaughter this week is down 2.5% from last week. USDA boxed beef cutout values were up $5.45 at mid-session yesterday and closed $7.74 higher at $226.36. This was up from $215.78 the prior week and is the highest beef market since May 6th. With October cattle below the 100.00 level there is really no bottom in sight right now and we could see some further pressure to the downside until the logistics of the packing plant get fixed. The gap lower does signal for a decline to the 97.000 which would be the next level of support.