Cattle Call is an original production of the Nebraska Rural Radio Association and presented by Blue Chip Herefords – Oxford, Nebraska.
Cash cattle’s explosive rally is doing more than setting records. It’s shifting near-term leverage to feedlots just as market-ready numbers tighten heading into May, according to KKV Trading’s Brad Kooima.
After a roughly $13-per-hundredweight jump in one week, Kooima said the move reflects a market that is no longer burdened by heavy cattle and is instead transitioning into a tighter, lighter supply base. It’s a setup that could keep packers aggressively bidding in the weeks ahead, he said.
“Thirteen dollars up on the cash in one week is unprecedented, no question about it,” Kooima said. “It seemed like these packers just couldn’t help themselves, fighting over each other to get some inventory around them.”
Kooima said feedlots are now largely current after working through heavy, long-fed cattle, and are moving into a new phase where fewer large animals are available. At the same time, high replacement costs are discouraging marketings and encouraging producers to add weight rather than sell early.
“The cheapest thing you have is what you own,” he said. “To try to buy a replacement at a break-even level is way up there in the rafters. These guys are going to feed them… what’s been working is to make them bigger.”
That dynamic is expected to tighten available supplies through May, with some cattle potentially being pushed into June rather than pulled forward, reinforcing near-term strength in the cash market.
Kooima also noted the recent rally has brought futures and cash relationships back closer to historical norms, with June live cattle futures trading near typical discounts to cash. While that suggests a more orderly structure, it also raises questions about how much of the rally ahead will be driven by cash strength versus futures gains.
From a producer standpoint, Kooima said the combination of tight supply and packer need could continue to support strong cash bids in the short term.
“I think the supply is so tight… there’s tremendous leverage at the feedlot here from a supply side standpoint,” he said. “He’s going to be vulnerable to just have to get blood on the floor for the meat that he’s going to have sold.”
Still, he cautioned that demand remains a key unknown as the industry heads into peak grilling season. While ground beef demand remains strong, higher-priced middle meats could face resistance, especially if broader economic pressures weigh on consumers.
Other topics discussed
- Basis movement and return to more typical cash-to-futures relationships
- Seasonal demand outlook for grilling season and middle meats
- Risk of demand pushback at higher beef prices
- Potential for slower slaughter rates if margins tighten
- Beef-on-dairy cost of gain comparisons and efficiency differences
- Drought concerns in the غرب and impacts on herd expansion
- Regional pasture stress in western Nebraska and Wyoming
- Packers inquiring about forward cattle supplies earlier than usual
