CAB Insider: September Setback, Seasonal?

There is very little insight needed to understand what happened in the cash markets last week. Seasonality and the conclusion of the Labor Day holiday were easy indicators that the market would be weaker in both the live cattle and boxed beef segments.   Fed cattle prices took a significant hit last week, devalued by a little more than $3/cwt. below the week prior in the live market. Texas fed cattle continue to trade at the lower end of the range due to the region’s larger supplies with the negotiated cash trade on a paltry 3,472 head averaging $100/cwt. The Iowa/Minnesota trade region saw a weekly top of $107/cwt. and a live average of $104/cwt. and $166/cwt. dressed. It’s difficult for the marketplace to identify what cattle should be worth at this particular point in time given the magnitude of spread between cattle and boxed beef values. Cattle feeders are eager to keep cattle moving toward the packer as they’ve been able to harvest some basis on futures positions for the time being. The latter hasn’t strengthened the feeder’s resolve to stand firm for cash price gains.   It’s fully within reason that cutout values posted major pull-backs last week as current price levels are unsustainable and a carryover from the emotional supply shock we saw during August. The weekly average CAB cutout price was down $6.11/cwt. with Choice down $5.70/cwt. and Select $3.32/cwt. lower. Price spreads between the quality grades and CAB vs. Choice narrowed slightly on the week.…

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