Morning Livestock Report, 01/04/2016

Monday, January 4, 2016

It seems fitting that the cattle markets finished out 2015, our most volatile year in recent history, with a real bang. Nearby Feb futures have rallied nearly $15 over the past two weeks, cash cattle $18, and the choice beef cutout more than $21. But is it sustainable now that we’re post-holiday and back to normal slaughter schedules? At least some of this move has been driven by weather and a cumulative effect on cattle that dates back to mid-November. This slowdown in cattle performance doesn’t get corrected quickly and now probably makes the market more sensitive to weather forecasts through the remainder of the season. Last week’s carcass data showed another decline in weights with the average carcass off 1 lb vs the prior week; steers and heifers each down 2 lbs. Weights remain record heavy, but are down a quick 15 lbs from the highs back in October, a larger than normal seasonal decline. This morning, outside markets look like the real story, with sharp losses in the equities probably testing the resolve of cattle bulls right out of the gate.

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