Page 8 - MWC 4-20-2023s

The Midwest Cattleman · April 20, 2023 · P8

MARKET REPORT

Live Cattle Feeder Cattle Daily

Live Cattle: Feeder Cattle:
Every personal dream for cattle producers has been reached The sale barn has been on fire recently. Feedlots are not con-
this month. Cash trades of $175 - $176 in the South, and $182 - cerned about $175 breakevens for cattle finished in Q4. Feeders
$185 in the North, easily pushed past the exciting peak posted in this past week were sold for a +35% premium over last year, calves
2014. That was not expected until perhaps Q4 at the earliest if +28%. Low prices 2018 – 2021 are now transitioning into a very
not sometime in 2024. The market questions whether the normal unique period set through 2026. Moisture in the coming months
seasonal increase in fed cattle from March to early June will hap- could act as a moderate influence in the months ahead. So far, we
pen. This period was supposed to be a temporary reprieve from are not holding enough heifers back to say expansion has started.
the real supply tightness later this year.
At face value cattle prices 26% over last year don’t make sense
given only a current 4% production cut vs. last year. There is rea-
Live Cattle: My thoughts center around this market stabilizing now. I’ve been
son for some of this unnatural price premium. The market is pric- 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
ing in concern over supplies in the coming quarters into “right 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
the feeder market has overdone it to the downside and it will be tough to break it
now” pricing. Additionally, the general 2023 – 2026 narrative of 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
falling cattle offerings combined with increased packing capacity they’ve really had time to concentrate on buying feeders. Let’em get caught up a
who wait”. I see production numbers staying over last years’ levels until at the
means the live animal level gets a larger share of the retail beef little and they’ll head to town.....checkbooks in hand....bulging with “corn” money.
least the end of the year. Beef shipments have been lagging last years’ levels now
for about a month. Two weeks ago they were 8% lower than last year. This weeks
dollar. The low point in recent years was 34% ownership. We’ll get This market will rally....wait and see.
report showed exports a whopping 56% lower than last year. This ain’t good. Low
up to a 60% share in the coming year. Current pricing for June
imports and high exports have held this market up all summer. We’re starting to
and August futures is now $10 and $8 over the “likely” price tar-
lose some of that. I just can’t pull the trigger yet on long term bullish hopes.
gets discussed in the last issue, $154 and $155.
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: Is it time to hedge fats?
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: We are not calling a top but this is far past our hopes. We would start hedges for 2023 cattle only for marketings through
going to have to kick in though in order to get it.
summer. Buying a $162 August put and selling a $154 put locks in $8 of downside for just over a $2 upfront cost with no margin
Q #2
calls. For corn, we would only buy needs through August at only at a likely spring low near $5.38 the December.
Due to the recent break in feeders, would you be holding your fall-weaned
Q: Now have feeder prices topped for the year?
calves for a while or letting them go?
A: We still hesitate to say they have really topped. In our view the feeder rally is more valid than fats. There is the seasonal support
Answer: What ever happened to the easy questions? This will depend upon your weaning sched-
for feeders from April through August. Though the corn/feeder relationship is not as clean as people expect, it is likely our lower
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
expectation for corn is a positive secondary factor.
minimize the grain in the ration. Grow them on good forage....”sell” $4.50 corn. If the fat market
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