By Eric McMillan, Ever.Ag 

Fed cattle negotiated trade continued to slide lower last week, with the market posting an average of $185 per hundredweight (cwt.) in the South and $185.44 in the North, basically $2.00 to $3.00 lower. This marks three weeks in a row of a declining negotiated price.  

Boxed beef prices also continue to slide lower. Choice boxes ended last week at $303.35/cwt., and Select ended at $276.14, down $4.59 and $3.05, respectively. 

Weak action in December futures has been presenting hedged sellers with historically strong basis values in recent weeks, incentivizing them to keep cattle moving. With weekly kills holding above 600,000 head and with record-high carcass weights, it would not be unreasonable to think packers could begin to slow their pace if declining boxed beef prices pinch profitability. Historically heavy carcass weights could also keep selling pressure on producers to avoid heavyweight carcass discounts. 

Cumulative beef export sales for 2024 continue to run about 1.5% below last year and 6.2% below the previous five-year average. Year-to-date, the three export markets with the biggest setbacks have been China and South Korea (both down 10.5%) and Canada (down 5.5%) 

The strength of the current futures market has been impressive considering what appears to be mostly negative current fundamentals. 

Related:U.S. beef exports rebound in China, Korea; Pork on record pace

It will be difficult for December futures to maintain upward momentum if the cash market does not soon follow, especially with the delivery period for that contract coming in a few weeks. Open interest remains high, with 347,166 contracts reported on November 18, near four-year highs.  

The risk of loss trading commodity futures and options can be substantial.  Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made.  The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.