Against a backdrop of very supportive supply fundamentals, there is much reason to be very optimistic about cattle prices in general and for the foreseeable future. At the same time, there are several market factors that remind us that there are limits to just how strong prices can realistically be.

Not surprisingly, boxed-beef prices have dropped back a bit from pre-Labor Day highs and, in fact, dropped below $160/cwt. for Choice last week. At current levels, boxed beef and fed-cattle prices are compatible and, while boxed-beef is looking for some footing, fed-cattle prices seem solidly grounded to maintain current levels for the rest of the year.

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