Livestock –
We just saw a very active week of cash cattle activity, and I guess that’s what a big rally in prices will do for you. The range for cash trade last week was probably 135-138 and 215-220, with 136 and 218 as averages. Basis did narrow slightly. Packer margins are still thought to be very solid despite the exceptionally strong cash action last week. The beef market stubbornly refuses to crack despite all the talk that the market is a dead man walking.
USDA reported on Friday that beef features are hovering near the lower end of this year’s range, but looking at the past two years’ data it seems to be running at a relatively average pace to me (chart follows on the next page). Let’s keep an eye on the comparison of beef/pork prices here. Beef prices have gained sharply vs. pork through most of this year but we’ve seen that spread work a bit more in favor of pork recently.
As noted above, basis did manage to narrow slightly last week but cash is obviously still a big premium to the board. Today is FND for June live cattle and it should go without saying that the big cash premium should keep delivery interest at zero.
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