Solving Cattle's High Supply a 'Tough Task'

October 7, 2016 01:48 PM

In the cattle markets this week, Tim Hackbarth of Zaner Ag Hedge gives his impression of the immediate outlook. Near-term markets are still bearish with cash prices still slipping, trading 102 in Texas and Kansas this week, he says.

“Boxes are still weak – not supportive with all the huge placements and marketings numbers we’ve seen on the recent Cattle on Feed reports,” he says. “There are still some heavyweights out there, adding to an already ample near-term supply, yet another bearish sentiment.”

Hackbarth went on to say, “The market absorbing all of this other meat in the pipeline is going to be a tough task. Given that there is so much cheap pork and chicken out there, there remains some sticker shock at the retail level versus beef, and quite honestly, the prices haven’t been lowered enough.”

December Live Cattle Futures on the CME were up slightly, hiting a high of 103.675, but prices have steadily declined over the past few weeks.

“There is some talk of supply tightening in the not too-distant-future, helping to sustain a rally, which is a good point, but we just aren’t there yet”, Hackbarth says. “As I mentioned previously, the 600,000 weekly kills will help the market get there, but in the near-term still appears bearish because of a more-than-ample supply.”

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Spell Check

norfolk , NE
10/8/2016 08:33 PM

  There is no problem with the cow numbers. The problem is the feeders who feed them to ridiculous weights of 1700, 1800 lbs and then wonder how come the market has crashed . The market could stabilize rather quickly if we would just stop the madness!!

King City , MO
10/7/2016 02:58 PM

  It is all our fault for increasing the cow herd too rapidly even though the the calves from the largest portion of the cow herd increase are just coming to town now. We have 1.5% more cattle on feed than a year ago and fat cattle are $40 cheaper than a year ago. Last week cattle on the rail were $20 to 25 cheaper on the rail than the choice box beef. The board has no connection to any fundamental reality. What fundamental reason did we have 2 weeks ago to run the Oct live cattle down $4 to get the feeders to sell fats $4 cheaper than the week before but after the fats were traded the board went to 20 cents positive. Then we had a neutral Cattle on feed report and the announcement that China was going to import our beef again. The following Monday the board went down and closed down the limit on Tuesday. Also the Wall Street Journal ran an article that the CME was going to end the Live cattle with Oct of 2017 contract because of a lack of cash cattle trade to give direction to the futures market. That is the same cash cattle trade that sets the price for all the grid and formula cattle that trade in that same week. Yet all you maarket "experts" can tell us is that we expanded the cow herd too fast. I call BS.

Kansas city , KS
10/7/2016 03:55 PM

  "and quite honestly, the prices haven’t been lowered enough" ranchers getting screwed. Really says packers hands are in the pockets of the traders. Check weekly feeder sales numbers hasn't grown much some weeks its less. Check the weekly profits of packers so up to $200 a head profit....that's were the prices need to be lowered from not their input costs of the cattle their buying, the ranchers are being screwed like no other and packers are cashing in. When packers own feed lots we've set em up and if they don't like our prices bring em in from mexico.


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