Page 8 - MWC 04-01-2021s

The Midwest Cattleman · April 1, 2021 · P8

MARKET REPORT

Live Cattle Feeder Cattle Daily

Live Cattle:
Last week’s $1 higher trade ends a period of seven weeks at $114. Feeder Cattle:
The market is now pricing in the belief a demand pull starting this Even with the February cold snap this year’s beef cow process-
spring will more than offset the seasonal increase in fed cattle offer- ing rate has run 2% over 2020 in the first nine weeks of the year.
ings in April and May. Additional help comes from the fact weights It is 14% over the same period two years ago. Drought, still seen
have been reigned in far quicker than we expected. in many areas, is a problem. The flip side of this issue is we are
The Federal Reserve currently estimates a 6.5% improvement continuing to draw down the beef cow herd, ensuring higher prices
in GDP vs. last year. That would be largest one year increase since in the years-out forecast. Our view of a three year period of higher
1984. With short term interest rates remaining near zero through cattle pricing remains in place, separate from the virus/fiscal/mone-
Live Cattle: My thoughts center around this market stabilizing now. I’ve been
Feeder Cattle: All you have to do is look at the corn market for a reason for the
placing a bullish tilt to this market for some time now. I may need to temporarily tary issues specific to 2021. Smaller calving numbers and increased
2023, fiscal stimulus, and the ending of virus lockdowns beef de- pull-back in feeders. If I owned a feedlot I’d be nervous to say the least. I do feel
place this on “hold” for a while. The higher placements the last three months will packing capacity should increase the live animal share of the retail
mand is expected to run strong Q2 on out. We suggest $117 for eco- the feeder market has overdone it to the downside and it will be tough to break it
further. The early corn harvest has most feeder buyers in the field and I don’t think
have a negative impact on prices yet, so like they say, “All good things come to those
nomic value on the June contract but expect psychological support dollar in the years ahead. This view is even stronger given the an-
who wait”. I see production numbers staying over last years’ levels until at the
they’ve really had time to concentrate on buying feeders. Let’em get caught up a
will make that the low end of pricing. October and December are nouncements since the last March 11 issue. We now have expansion
least the end of the year. Beef shipments have been lagging last years’ levels now
little and they’ll head to town.....checkbooks in hand....bulging with “corn” money.
seen with economic value at $123 and $125. announced at the Tama, Iowa plant and a new one in the works at
This market will rally....wait and see.
for about a month. Two weeks ago they were 8% lower than last year. This weeks
report showed exports a whopping 56% lower than last year. This ain’t good. Low North Platte, Nebraska.

imports and high exports have held this market up all summer. We’re starting to Though we do not forecast a major change for general feed prices
lose some of that. I just can’t pull the trigger yet on long term bullish hopes. over the next year we can suggest a stronger pull on calf and feeder
prices later this spring/early-summer.
Trading commodity futures involves substantial risk of loss
and my not be suitable for all investors. The recommendations
Rich Nelson express opinions of the author. The information they contain is
Allendale Inc. Allendale Inc. obtained from sources believed reliable, but is in no way guaran-
815-578-6161 teed. The author may have positions in the markets mentioned
including at times positions contrary to the advice quoted herein.
rnelson@allendale-inc.com Opinions, market data, and
recommendations are subject to change at any time.
What Does this Report Mean to Me?
Q #1
Q: Should I continue to hold upside protection on future feeder purchases?
What do you think the price of fats will be in April 2011
Answer: It’s hard to see the forest for the trees here, but peering through the foliage I see $105.00 fats on the horizon for April. Demand is
A: Yes. The $146/$156 May feeder cattle call spread discussed in the previous issue is doing its job just
going to have to kick in though in order to get it.
fine. We want the feeder side locked in and the Q4/Q1 fed cattle pricing open. We will be evaluating feed
Q #2
cost hedges if given the chance over the next two months.
Due to the recent break in feeders, would you be holding your fall-weaned
calves for a while or letting them go?
Q: Is there much pasture being moving into crop production at these prices?
Answer: What ever happened to the easy questions? This will depend upon your weaning sched-
A: There has been a 12% decline in all-hay acreage over the past 10 years. Drought in many areas has
ule and your available feed supply. I’m long term bullish the feeder market but the “reality” of
right now probably dictates letting them go. If you keep them for an extra 30 days, make sure you
exaggerated this hot forage market. There may be another 200,000 acre removal from last year’s 52.238
minimize the grain in the ration. Grow them on good forage....”sell” $4.50 corn. If the fat market
million acres of pasture.
stays sluggish and corn prices don’t moderate, about the only thing you’ve got to hang your hat on
for “higher feeders” is “Hope”.
November 6th

Auction

Lunch at 11:00 a.m.
Sale at 12:30
Sale Offering
16 - 2010 Heifer Calves Jan. - May
16 - Breeding Bulls 7 to 18 months RH Standard Lad 0313
16 - Spring Calving Bred Females Solid As A Rock Sire Group
16 - Spring Calving Black Females Reynolds Herefords
Bred to Hereford Bulls
8 - Fall Calving Pairs 1071 County Road 1231
6 - Show Steer Prospects
Both Horned & Polled Offered Huntsville, MO 65259
Home: 660-277-3679 • Matt: 660-676-3788
November 5, 2010 Sale offerings on
Display 3:00 P.M.
CHB Dinner at 6:00 P.M. • Barb: 660-676-4788
Call or E-Mail for Catalog Email: reynoldscattle@cvalley.net