The key question for this week is will the beef packer continue to chase?
• The wholesale beef appears to have reached the tipping point. It had an impressive $47 rally with the peak just above $240.00 last week.
• Despite the surge in cash steer prices, beef packer processing margins are STILL positive.
• Futures discount to cash could keep bears at bay for a while but last Friday’s sell off may have been more new sellers and less profit taking than originally perceived.
• If the beef begins to back up, and work lower, there will be a time in which the cash steer market drops hard.
• If packers have been already booked, already sold beef at these high prices they might be in the market again this week, chasing cattle.
• Feedlots, on the other hand, have the incentive to pull cattle ahead and take advantage of these prices. The cattle-on-feed was a bit negative.