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The Midwest Cattleman · April 23, 2020 · P8


        Live Cattle                                                          Feeder Cattle Daily

       Live Cattle:
         It appears the new virus findings are beginning to plateau.  Feeder Cattle:
       Gasoline usage has stabilized for two weeks at -48% and -46%            The cow/calf producer is often first in line to benefit when sup-
       year/year.  Weekly jobless claims, though incredibly high, are  plies are tight and demand is high (2013 – 2015). That also means
       off their peak from two weeks prior. The psychologically bear- the opposite when times are tough. Lower consumer demand,
       ish pressure from panic is easing. This market has quickly and  lower purchases of finished cattle by processing plants due to the
       violently priced in reduced demand from in-restaurant dining,  labor bottleneck, and therefore lower levels of replacement ani-
       business conferences and dinners, travel, family get-togethers,  mals by feedlots have pushed feeder prices to 10 year lows.
       and the all-important grilling season. The current low for live         There may not be a good short term solution to this issue. The
                                                                               Feeder Cattle:  All you have to do is look at the corn market for a reason for the
         Live Cattle:  My thoughts center around this market stabilizing now.  I’ve been
       cattle futures was made on April 3. Many in the trade suggest  medium term impact may be better than many would suggest
        placing a bullish tilt to this market for some time now.  I may need to temporarily
                                                                             pull-back in feeders. If I owned a feedlot I’d be nervous to say the least.  I do feel
       that is the low.                                                     though. March placements will be at record lows. April levels will
                                                                             the feeder market has overdone it to the downside and it will be tough to break it
        place this on “hold” for a while.  The higher placements the last three months will
         While demand issues have been factored in the current prob- run 25% - 35% below last year. Assuming virus related demand
        have a negative impact on prices yet, so like they say, “All good things come to those   further.  The early corn harvest has most feeder buyers in the field and I don’t think
       lem is the labor bottleneck at processing plants. Weekday kills  concerns have eased by fall, there will be valid talk of beef short-
        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
                                                                             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
       the prior week were 20% below where they should be. Some say  ages for a couple months at the end of the year.
                                                                             This market will rally....wait and see.
        for about a month.  Two weeks ago they were 8% lower than last year.  This weeks
       it will not be until May that we clear out the backlog in market
        report showed exports a whopping 56% lower than last year.  This ain’t good.  Low
       ready cattle. Short term pressure remains. We could see a sharp
        imports and high exports have held this market up all summer.  We’re starting to
        lose some of that.  I just can’t pull the trigger yet on long term bullish hopes.
       rebound in prices into fall/winter based on lower finished sup-
       plies and perhaps the slow ending of the virus impact.
                                                                                                   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.                                                                  Opinions, market data, and
                                                                                                   recommendations are subject to change at any time.
        What Does this Report Mean to Me?
         Q #1
        Q:If the peak of the consumer demand portion of the virus problem is behind us, how
        What do you think the price of fats will be in April 2011
        quickly will prices rebound?
        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
        going to have to kick in though in order to get it.
        A: That is the million dollar question. Bulls can argue the missed conferences, meetings and family events will
         Q #2
        result in a quick return to normal for beef demand. Others suggest consumers will be wary of large gatherings
         Due to the recent break in feeders, would you be holding your fall-weaned
        for a few months. We do not have a firm answer at this point.
        calves for a while or letting them go?
        Q: Are you still sticking with $138 for August feeders?
        Answer: What ever happened to the easy questions?  This will depend upon your weaning sched-
        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
        A: For now, assuming virus issues are easing we still see a $10 rally here.
        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

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                                                                              16 - Breeding Bulls 7 to 18 months             RH Standard Lad 0313
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