Page 8 - MWC 8-20-20s

The Midwest Cattleman · August 20, 2020 · P8

MARKET REPORT

Live Cattle Feeder Cattle Daily

Live Cattle: Feeder Cattle:
Fed cattle futures may be nearing the last stages of an im- The year’s flush of sale barn calves is directly ahead. Positively,
pressive rally. $10 has been added on to cash prices over the past prices have recovered back to last year pricing (pre-Holcomb fire).
six weeks. Residual gains, already implied by futures, may be It must be noted this year’s Jan – Jul calving was estimated 0.9%
seen into October. Much of this action has been determined by under last year according to the last bi-annual inventory report.
good Labor Day procurement. That procurement ended on Au- We expect contraction in the cow/calf sector to continue lightly
gust 23rd and 21st in the previous two years so the easy money over the next two to three years. We are having conversations
here may slow. Additional support comes from the belief much with reluctant cow/calf producers about starting light expansion
of the cattle backlog has already been committed and processing now while their neighbors are cutting back. Playing the Cattle
over the next two months will clean the rest up. Cycle, buying heifers and young cows at these lower prices, and
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 pull-back in feeders. If I owned a feedlot I’d be nervous to say the least. I do feel
As we move past the backlog issues by the end of October, selling the offspring into a rising market in the years ahead may
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
we see supply normalizing all through Q1. Our forecast for July be something to consider.
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
Part of our problem over the past five years was expansion in
feedlot placements is like June, 2% higher than last year. We 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
hesitate to get too bullish past current prices implied by futures cattle-offered just after packers closed plants. In our new situa-
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
This market will rally....wait and see.
as the employment situation remains a concern through first tion we have one new, albeit small, plant in the plans and a re-

report showed exports a whopping 56% lower than last year. This ain’t good. Low
half 2021. One wildcard will be how well the pork industry deals duced herd up ahead. We may get back a share of that wholesale
imports and high exports have held this market up all summer. We’re starting to
with its Q4 backlog. beef price lost after 2015.
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.
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: What is your price forecast ahead?
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: Our price targets from October through April have been met. We will discuss hedging in coming issues.
going to have to kick in though in order to get it.
Q: What is the price outlook for feeders now?
Q #2
Due to the recent break in feeders, would you be holding your fall-weaned
A: Prices have exceeded our upside target, but we do not expect that to last forever. A downside floor, in the last
calves for a while or letting them go?
issue a purchased $140 put and sold $148 call for the January, was discussed. Given virus risks ahead we still
Answer: What ever happened to the easy questions? This will depend upon your weaning sched-
like this strategy.
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
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