Cattle & Ranch Report
May 8th, 2024
Live Cattle:
Open interest plummeted on Tuesday’s mildly higher trade. With beef production having caught up with last year, and no indications of the packer offering to slaughter more to decrease beef prices, the rationing of beef continues and makes for less demand for cattle. Further consolidation is being noted as well with Central Valley Meats obtaining a Cargill beef processing plant in Fresno, California. Another source was rambling of other consolidations that may not pass the antitrust laws sniff test. Regardless, what has been expected continues to be recognized as the industry as a whole is having to work under more restrictions, limitations, and increased cost of production. With the aspects fading of continuing higher in price, a lot of really high-priced feeder cattle will have to move through the system before that pressure of losses is relieved. Lastly, with all energy products now believed in a bear market, it will continue to reflect weakening growth and consumer strife.
Feeder Cattle:
Open interest in feeder cattle has never been stellar to begin with. This year, I have seen very little movement of. Mostly, less than a 15% increase or decrease on any given week. I noticed that even the open interest in feeder cattle declined on Tuesday, after a fairly big up day. In my mind’s eye, it suggests less interest in participating in this market. How can this be so with so few cattle on hand? The industry found a way to produce more beef with what they had and kept the price high at the retail level to ration consumer demand. The feeder cattle index is believed in a wave 3 with a downside target of $230.00. I think that could be achieved before the end of May.
