DTN Livestock Open: Feedlots Expect Higher Cash

    Cattle feed lot. Photo: K-State Research and Extension - Creative Commons

    Livestock futures continue to show solid support as consumer demand ramps up. Packers are paying more for beef and pork, but consumers continue to spend money to get it.

    Cattle: Higher Futures: Higher Live Equiv: $193.50 +$2.33*
    Hogs: Higher Futures: Higher Lean Equiv: $115.98 +0.10**
    * based on formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. Index has been updated to depict recent changes in live cattle weights and grading percentages.)
    ** based on formula estimating lean hog equivalent of gross packer revenue

    GENERAL COMMENTS:

    The increase in cattle futures did not do justice to the increase of cash already this week. Packers were willing to pay as much as $4.00 higher than last week and some feedlots were willing to accept those higher bids rather than hold out for more later in the week.

    This can be looked at two ways. Feedlots need to move cattle and wanted to get on the list rather than wait for potentially higher bids and risk not getting cattle sold for another week. Also, feed is not cheap and the longer market-ready cattle are held the less profitable they might be.

    Futures continue to lead the way higher, giving feedlots some confidence packers will pay more. Strong boxed beef prices indicate demand is surging as consumers want beef for grilling and restaurants want beef to satisfy customer demand.

    Packers need to purchase cattle and are hopeful bidding $4.00 higher early may get the job done.

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