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Ridgway, IL | The choice cutout at 250 is way overvalued due a couple factors
1. Good spring early summer demand
2. Seasonally low 1st quarter supplies
Exaggerated by poor 4th q 16 placements due to soft market conditions
3. These factor created the inverted market conditions that encouraged early harvest of fed supplies
4. This early harvest brought harvest weight down, which also brings choice supplies down due to less days on feed
5. This pushed choice cutout
Now the situation is
1. Increasing numbers available as we are well into calf feds
2 harvest weights are on the rise. Driven by seasonals and watch feed price
3. Expect increase choice supplies as carcass weights rise
4 continue to expect large placements driven by wheat grazeout conditions followed by drier than normal conditions in the north
I expect choice to drop 20-30$ to come more in line with select as choice supplies increase. We are setting up for a weak 4th q 17. Another 10$ come off live cattle imo.
Alternative explanation = meat casino
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Cattle on sale.
