Dallas Granstra, Cattle Call: Cattle inventory report neutral

Futures trade finished the week with a wild day. Cash led a morning rally followed by a sharp sell off. I think outside market pressure and a potentially bearish cattle inventory report pulled it down.

Cash surprised me this week! $240 traded in the north and the south. With breakevens getting higher each week, I think this is a nice win for cash. Technically I think the market is going to want to visit these gaps above us and contract highs by summer time. There is a lot of outside market anxiety that we will have to weather. Financial and geopolitical concerns may throw some wild days at the market. Heifer retention and the Mexico border story will continue to be a factor also. Beef on dairy placements will become more of a talking point as well.

From a risk management perspective, I would be disciplined with a plan going forward. I think big rallies should be rewarded as the market starts to sense the industry turn from liquidation to expansion mode.

The Cattle inventory report was neutral overall, but is suggesting that we may have put a low in overall inventory numbers. All parties in the industry have been discussing herd expansion since liquidation started. It will be an interesting year as we potentially test that narrative against a different level of demand than what we saw in the 2015 herd expansion.

Dallas Granstra

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