Page 8 - MWC 8-11-2022s
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The Midwest Cattleman · August 11, 2022 · P8


       Live Cattle                                                           Feeder Cattle Daily

      Live Cattle:
         The cash cattle market is nearing the end of the normal supply  Feeder Cattle:
      overage it sees in the summer. Prices in the past week or two in        The general story for feeder and calf pricing is unchanged from
      the South re-tested the year’s lows posted in June. They did not  our discussions from the spring. Four years of liquidation has been
      take them out though. Aggressive feedlot sales in July, 2.4% over  noted for beef cows and the combined beef/dairy calf crop born
      last year, helped to draw down supplies and even bring weights to  in 2022 will be the smallest in seven years. Feeders are running
      1 lb. under last year. That is quite a feat. The general supply story  about 9% over last year and calves by 13%. Though it took a sig-
      ahead is a light seasonal improvement through October then clear  nificant amount of pain, four years of beef cow liquidation, we are
      long-term liquidation impacts in Q4 and through 2026. Over the  finally seeing the end results.
      next three years we will offer the US consumer per capita supplies
      even tighter than seen 2013 – 2015.                                      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
         Long term liquidation, already long in-place, will certainly hit
       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
      supply. There are concerns about demand though. Two quarters of       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
      lower GDP, year over year, was already confirmed. We can agree        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
       who wait”.  I see production numbers staying over last years’ levels until at the
      consumer push-back will compress prices starting at the retail        they’ve really had time to concentrate on buying feeders.  Let’em get caught up a
       least the end of the year.  Beef shipments have been lagging last years’ levels now
      end over the next nine months. But that does not mean lower live      little and they’ll head to town.....checkbooks in hand....bulging with “corn” money.
       for about a month.  Two weeks ago they were 8% lower than last year.  This weeks
                                                                            This market will rally....wait and see.
      animal prices (fed/feeder/calf). We have confirmation two of those
       report showed exports a whopping 56% lower than last year.  This ain’t good.  Low
      proposed new beef plants are breaking ground now. We expect the
       imports and high exports have held this market up all summer.  We’re starting to
      live animal level to re-take lost share of the wholesale beef dollar
       lose some of that.  I just can’t pull the trigger yet on long term bullish hopes.
      and that packers and end users will see margin tightening ahead.
                                                                                                  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 the outlook for finished cattle?
       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 bullish but not as much as futures. Our prices for December, February and April futures are $145, $152 and $152 at
       going to have to kick in though in order to get it.
       expiration. But bulls will likely overshoot the upside as we finally get past seasonally large summer supplies. We’ll start hedges
       at $152, $154 and $160 respectively.
        Q #2
        Due to the recent break in feeders, would you be holding your fall-weaned
       Q: Will the Plains problems with corn and sorghum yields this fall show up in the nationwide
       calves for a while or letting them go?
       feed picture?
       Answer: What ever happened to the easy questions?  This will depend upon your weaning sched-
       A: We think it will, but eventually. In recent years, the general expectation was better yields than expected when the combines
       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
       rolled. In this case, we may have to wait until fall to see the true yield situation. With very good conditions in the East, we would
       minimize the grain in the ration.  Grow them on good forage....”sell” $4.50 corn.  If the fat market
       expect corn yields -3% to -5% from trend when all said and done, 172.0 – 175.6. That could support corn futures back to 650.
       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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