In my opinion, observations from the previous two weeks are believed to have culminated into this week's trading.  I noted more than once at the first of the week how odd the trading was.  Cattle feeders had been taking it on the chin in widening starting margins already, but the first two days of this week saw sharply higher feeder cattle to not nearly as high of fats.  On Thursday, that changed with traders hammering the feeder cattle market, widening the basis abruptly, and forcing unhedged producers to rethink their positions. If you didn't like marketing when basis and price were friendly, you are not going to like the market at Friday's close. End of week price action leads me to continue to anticipate a return of prices to the March low per respective contract month, followed by a sideways to higher trade as we go into the video sales of summer.  Volume of those sales is expected to be a little lighter this year than last.  Drought has already moved some inventory.  I don't think the drought will mean as much to cattle as it will cattlemen.  That is because we are not liquidating cattle; we are moving them from one place to the next.  This simply leaves out a production time frame for another producer.  Hence, as the rationing is believed to have brought equilibrium between consumer demand and beef supplies, the next round of rationing is believed of production capacity. 

Futures traders dug an enormous tiger trap in the feeder cattle market, with fats not far behind.  This is a very poor basis spread to now start hedging.  Traders have pushed futures down sharply, leaving the cash market significantly higher.  Next week will be the test of whether cash retreats lower; futures mount a rally, or a little of both. With the on-feed report looming as I write this, it may be what tips the scale.  I recommend you begin measuring basis for a narrowing opportunity to materialize for which you would be more comfortable marketing inventory than where it closed Friday. This price break lower in futures has opened the door to several different ways to manage existing positions.  I highly recommend you attempt to discover the ways available to help manage immense risk of potential adverse or beneficial price expanse.  

Outside markets were of no help to producers with energy still at the tip top and corn no softer.  Interest rates soared this week as both China and Japan reduced their holdings of US debt. Government spending continues to inflate core with no letup of commodity.  I anticipate energy to continue higher with little expectation of Iran doing anything the US wants.  I anticipate interest rates to continue higher, because government spending is immense.  Both appear to be impacting the consumer in a more noticeable way through the shifting of their spending habits.  Watching box beef prices move lower at this time of the year is believed stark evidence of how far behind government reports can be in reflecting hardships of consumers, when the consumer already knew about it.