Morning Livestock Report, 10/02/2015

Friday, October 2, 2015

The cattle markets finally managed a two-sided trade yesterday, actually closing slightly firmer in the far deferred contracts. But the nearby October contract remains the headline, diving another $3+ lower yesterday. A $2 loss today and it will be the worst weekly performance for the nearby contract in history, topping the Christmas 2003 performance we all wish to forget. But in the process, we do finally have futures and cash generally in line. Weekly carcass weight data out yesterday spells out the problem pretty clearly - steer weights were up 4 lbs vs the prior week and are 36 lbs above last year; heifers up 7 lbs vs the prior week and 25 lbs above last year. Big picture, how long until retailers begin aggressively featuring beef at these newfound price levels? As beef prices were climbing during 2013-2014, the retail, food service, and end user impact took months in many cases and there is some fear that now as beef prices come off, the lag time will again be significant (perhaps til well into 2016?) which keeps demand tepid longer than bulls would hope.

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