Morning Cattle Market Report 11/21

Ideas that cash cattle can trade higher this week led by the firm beef market and pent-up East Coast demand has helped to support the uptrend this week. Cash cattle bids emerged at $122-$123 for the southern plains with offers at $127-$129. Cash traded at $125-$126 last week. Packer margins remain in the red, and this may be a limiting factor for the cash market but supply appears to be tightening and packer demand improving.

December cattle closed sharply higher on the day and saw the highest close since October 24th. The market traded near unchanged on the day into the pit opening but a more positive tone for demand this week helped support a bounce to higher on the day. Even the set-back in the stock market in the afternoon failed to attract much in the way of selling interest.

Beef prices were higher Monday and again yesterday to help support. Boxed beef cutout values were up 45 cents at mid-session yesterday and closed 11 cents higher at $194.28. This was up from $193.39 the prior week and is the highest beef market since October 31st. On top of the price bounce, traders indicated the highest Monday volume of boxes traded since late July, and this was seen as a positive sign for demand.

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Slaughter was higher than expected Monday, which also suggested stronger than expected demand from packers to own live inventory. Slaughter came in higher than expected again yesterday at 130,000 head, and this can sometimes indicate firm demand for inventory from packers. Cumulative slaughter for the week reached 259,000 head from 242,000 head last week and 261,000 last year. For the monthly cold storage report released after the close, traders see beef stocks near 420 million pounds as compared with 417 million last year. The 10-year average for October shows a normal increase in cold storage stocks of about 1%.