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Continued Tightening Of Feedlot Inventories Is Market Friendly

  Lower than expected placements and higher than expected marketings should help lift fed cattle futures prices Monday.

The somewhat lower than expected March 1 inventory of cattle on feed is a bit friendly to Monday's markets. February placements also came in a bit below average trade expectations. That's also a bit friendly.

February fed cattle marketings were down a smaller amount than traders generally expected. Those figures all point to continued tightening of fed cattle supplies.

Tight feedlot supplies along with growing population suggest beef fundamentals are sound and should support higher prices in the cattle complex. Beef and cattle prices do seem likely to move record high this year. However cattle have several hurdles to overcome to record those new highs. A short list of price dampers includes:

Lower than expected placements and higher than expected marketings should help lift fed cattle futures prices Monday.

Feedlot closeouts have been negative for months. Shrinking cattle supplies and negative packing margins prompted Cargill to close its plant in Plainview, TX. Dismal or negative margins deter packers from bidding up to get cash cattle. Choice wholesale beef prices have made several assaults on the $200 per cwt. mark and fell back. Cash fed cattle meet stiff resistance in the $130/cwt. area. 

Despite record highs on Wall Street, high gasoline prices and expiration of the payroll tax cut leave consumers with little spare cash. One result is they bypass beef at the meat counter in favor or lower-priced pork and chicken. 

To read the entire article, click here.


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