Cattle Weekly Comments April 12

Cattle Weekly Comments April 12

Cattle were able to post grains in 3 out of the 4 sessions for the week ending Thursday. Support was due to technical buying as cattle are oversold and in need of a correction. But gains were kept in check by reports of more avian flu cases in other states as well as from a larger increase in inflationary indicators than expected. The avian flu and higher than expected inflation indicators have traders concerned about domestic demand for beef going into the summer BBQ season.

The week had cattle starting off on the plus side due to support from technical buying as traders tried to correct an oversold market condition. Expectations for a decent cash trade added support. Feeder cattle were pressured early by spill over pressure from the higher grains. Light pressure came from economic concerns as traders are worried that inflation is still increasing, which in turn will result in the Fed leaving interest rates unchanged as best. The front month April was able to shake off early selling pressure and push higher due to spill over support from the cash market. April feeder cattle will soon go into delivery and it is starting to track with cash. Live cattle also saw support from a strong boxed beef market.

Tuesday’s session had live cattle opening higher and really never looked back while feeder cattle opened the session mixed and spent most of the morning trying to figure out which direction feeders should go. Both were supported by technical buying due to the knee jerk reaction toward the avian flu. Early gains were kept in check by a surge in slaughter weights. Last week’s cash activity was reported taking place between $187 and $189, but no cash activity has been reported this week. Feeder cattle saw spill over support from the lower grain complex. Light support was also due to futures discount to the cash feeder cattle index.

Selling pressure dominated the cattle markets midweek due to disappointing economic data. The CPI rose 0.4% in March, which was higher than expected. It’s now unlikely the Fed will cut interest rates in the next few months. Cash trade has been slow this week. USDA announced they are eliminating the July Cattle Inventory report due to budget concerns.

Strength returned to the cattle markets to end the week Thursday. Cattle started the session under pressure with early selling tied to avian flu concerns, higher slaughter weights, as well as from economic concerns as it appears inflation is still alive and well. The lack of deliveries against the April live cattle market helped live cattle start a recovery and once the grains turned lower, more buy orders were uncovered. USDA’s April Crop Production report as neutral to cattle as it left 2023 production unchanged at 26.96 billion pounds. 2024 production saw a slight increase of 130 million pounds to 26.46 billion pounds. Feeder cattle support spilled over from the lower grains as well as from strength in the live cattle. Gains were kept in check from economic fears.

For the week, April closed at $178.90 up 65 cents. April feeder cattle were at $237.60 up 10 cents.