Packers sourced cattle at mostly steady money on the negotiated cash market last week, with trade occurring at $190.00/cwt. in the South and $188.00 to $190/cwt. in the North. A couple days of heavy losses in live cattle futures midweek seemed to have spurred the early movement.

Weekly slaughter data released Thursday revealed another sharp jump higher in dressed steer weights, reported to be 960 pounds, up 10 pounds from the previous week and 33 pounds above last year. Heifers were reported at 866 pounds, up three pounds from the previous week and 26 pounds above last year.

For the week, Choice boxed beef averaged $319.50/cwt. and select averaged $288.37/cwt., down $2.83/cwt. and $6.87/cwt., respectively. 

Choice rib continued its rip higher last week. Seasonally, it tends to post modest gains in October before surging higher mid-November through the first couple weeks of December. However, nothing is modest about the holiday season strength noted so far for the rib.

Brisket continued its slide lower after strongly defying the seasonal weakness typically seen in the first half of October. The chuck appears to be following its seasonal decline, as well, after peaking last week, but continues to trend well above year-ago levels. This has been the pattern nearly all year.  

Overall, nothing screams for concern on the wholesale front as of today. Choice boxed beef outperformed expectations in the month of October, and a sideways-to-lower trade into the end of the year has been anticipated. 

On the retail side of the equation, the pattern of persistently higher food-away-from-home prices as compared to food-at-home continues to push consumers to the grocery store and away from the restaurant sector. This is the market giving a quick flash of its emergency beacons to serve as a warning that a limit is being pushed. 

And there’s likely little relief ahead. USDA predicts in 2025 that prices for all food are predicted to increase 2.4%, with food-at-home prices increasing 1.6% and food-away-from-home increasing 3.4%.

Losses in futures last week were likely sparked due to some end-of-month position squaring, along with some toppy action in the boxed beef market. The market appeared restless after failing to punch through $190.00/cwt. in the December live cattle contract on the heels of a 5-Area Weekly Fed Steer price that printed north of $190.00/cwt. the previous week, something the market had not done in over two months.

December live cattle futures posted a bearish reversal lower on the weekly chart. Support kicked in at the 200-day moving average of $184.55/cwt., where the market caught a bid after trading down to its lowest price on Friday since October 1.

January feeder cattle futures had a $7.80/cwt. range last week, although closing only $2.425/cwt. lower for the week. Technically, the January contract also posted a bearish reversal on the weekly chart, however, firm buying was noted after briefly piercing major support of $240.00/cwt on Friday morning.

Friday’s CFTC Commitment of Traders report showed managed money adding another 7,691 contracts to their net long position in live cattle futures, now at +100,516 contracts. Open interest in live cattle futures stands at 354,893 contracts, having gained over 10,000 contracts on the week. A sizeable net long position held by the funds and the highest open interest in live cattle futures since March of last year leaves the market ultra vulnerable to a selloff.  

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.