Weather has been one of, if not the biggest, driving forces in the cattle market this entire month. It is going to take some time for cattle on feedlots to recover and gain weight due to the severity of the of the weekend storm, which should keep the market in an uptrend and push cattle prices higher. One of the bigger questions for today’s trade would be what are the packers going to do this afternoon, do they buy less head at a higher price or try to bid at a lower price for more? What I do know is that distressed cattle are one of the worst things for your operation, essentially draining the capital right out of the operation.
If the packers decide that they only want 50k a head or so, then I would expect the April contract to start to see a downtrend as the distressed cattle would continue to drain capital, putting an emphasis on having them getting marketed as soon as they’re ready. Feedlot conditions are very poor and with the 8-14-day weather forecast, it doesn’t look like it’s getting any better. The USDA estimated cattle slaughter came in at 119,000 head yesterday. This was up from 108,000 last week, and up from 117,000 a year ago at this time. USDA boxed beef cutout values were up 18 cents at mid-session yesterday and closed 21 cents lower at $219.46. This was up from $216.49 the prior week. Technically, the chart shows that the current breakout could cause a push to the 130.20 level, resistance is that the 130.15 price level. 130.15 may not be tested today but with the upcoming weather, I suspect it will be sooner rather than later we start seeing 131 cattle.
Live Cattle Apr ’19 Daily Chart