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The Midwest Cattleman · August 10, 2023 · P8


       Live Cattle                                                           Feeder Cattle Daily

      Live Cattle:                                                          Feeder Cattle:
         Since our last conversation the market finally posted a near         The normal seasonal rally in feeder prices, from March lows
      term peak at $185 for the South and $189 for Nebraska in June.  to August highs has been exaggerated this year. High fed cattle
      The most recent week’s trade at $179 and $185 respectively is not  prices, the expectation for continued supply tightening 2023-2026
      that far off. These prices are 32% over last year. Based on only a  and a downtrend in corn have all helped. Current prices are 40%
      4% cut in production, that’s not bad at all. The trade continues  over one year ago. But we are now at the point where seasonal
      to hold clear support given expectations of a continued supply  support turns into a seasonal peak. The same seasonal holds for
      decline through 2024 and 2025. This is part of the unnaturally  feeder cattle futures. September – March contracts have a typical
                                                                               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
      strong pricing that will continue to befuddle analysts that are  annual peak on August 1. Back months typically decline until at
                                                                            pull-back in feeders. If I owned a feedlot I’d be nervous to say the least.  I do feel
       placing a bullish tilt to this market for some time now.  I may need to temporarily
      used to clear cut supply, demand and pricing arguments.               least December 9.
       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
         We agree with the market’s implication that cash will trade
                                                                              The beef trade is preparing for the annual flush of offered
       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
      sideways for a few weeks then move higher into Q4. There will  weaned calves. We expect prices at the peak marketing in the
                                                                            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
       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.
      be a small supply push in Q1 as recent placements were +2.7%  first week of October to run 35% over last year. Our $235 estimate
                                                                            This market will rally....wait and see.
       for about a month.  Two weeks ago they were 8% lower than last year.  This weeks
      and +4.6% year/year but that may be temporary in the generally  for 525# calves out of Oklahoma City would be the second highest

       report showed exports a whopping 56% lower than last year.  This ain’t good.  Low
      positive 2024 year ahead.
       imports and high exports have held this market up all summer.  We’re starting to  ever for that month, only second to $290 in 2014.
       lose some of that.  I just can’t pull the trigger yet on long term bullish hopes.
                                                                                                  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: What is your view on corn?
       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: There has been damage to US corn yields but it won’t be enough to support prices. We need a nationwide yield hit of -12.5%
       going to have to kick in though in order to get it.
       from trend, 158.8 bpa, to justify $5.40 December futures. Eventual fall lows are seen anywhere from $3.70 - $4.40 depending on
       yield. Buy only hand to mouth at this time.
        Q #2
        Due to the recent break in feeders, would you be holding your fall-weaned
       Q: What is the next price for long term feeder buys?
       calves for a while or letting them go?
       Answer: What ever happened to the easy questions?  This will depend upon your weaning sched-
       A: We were fortunate at the start of this year to have recommended getting all planned 2023 feeder purchases hedged via long
       ule and your available feed supply.  I’m long term bullish the feeder market but the “reality” of
       feeder cattle futures or calls. That worked great. We have the same plan for the next general price break for 2024 needs. The
       right now probably dictates letting them go.  If you keep them for an extra 30 days, make sure you
       seasonal is key in our mind. We’ll hold from an official recommendation but expect $235 - $240 March and May 2024 futures in
       minimize the grain in the ration.  Grow them on good forage....”sell” $4.50 corn.  If the fat market
       two to three months.
       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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