Page 8 - MWC 8-25-2022s
P. 8

The Midwest Cattleman · August 25, 2022 · P8


       Live Cattle                                                           Feeder Cattle Daily

      Live Cattle:
         Over the prior two weeks cash cattle saw gains of up to $6/ Feeder Cattle:
      cwt. The trade is now preparing to move beyond the well-sup-            As we get closer to the coming fall calf marketing the sale barn
      plied summer 2022 market and get into a tighter supply scenar- is still holding some strong pricing. Calves are running 13% over
      io which will not end for years ahead. While we agree with the  last year. Feeders are 15% over. After aggressive heifer inflows
                                                                               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
      general tightening supply narrative, we do not agree with one of  since last fall many are questioning how many of the 2021 born
       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
      the market’s biggest cheerleaders, USDA. They see US beef pro- calves are still left to place. That also is a problem when we are
       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
      duction running year over year declines of -5% for Q4, -7% for Q1  preparing for another year over year decline in the coming num-
       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
      and -8% for Q2. The problem with their view is Q4 supplies are        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  bers this fall.
      already in the feedlot and there were no placement declines near      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
      5% in prior months. Q1 supplies are mostly known by this point,       This market will rally....wait and see.
       report showed exports a whopping 56% lower than last year.  This ain’t good.  Low
      the September COF report, covering August placements, will be
       imports and high exports have held this market up all summer.  We’re starting to
      the last main piece. We are not seeing a general narrative of a 7%
       lose some of that.  I just can’t pull the trigger yet on long term bullish hopes.
      decline verified.
                                                                                                  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 strategy are you discussing for taking advantage of these high futures prices?
       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
       going to have to kick in though in order to get it.
       A: After a three month rally, we now suggest buying a $154 February put, selling a $146 put and selling a $166 call as a
       package. This locks in a floor for downside protection from $154 to $146. The upfront cost is also lowered by selling a call quite
        Q #2
       a bit away. The upfront cost would be around $1/cwt. with a small margin requirement. This allows for a floor but also allows
        Due to the recent break in feeders, would you be holding your fall-weaned
       for a full rally of up to $12 if seen. This is our strategy for November – April finishing cattle and will be considered in place for
       calves for a while or letting them go?
       future commentaries.
       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
       Q: When will the feeder market peak out?
       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
       A: Cash feeders, 7 – 9 weights, normally are peaking out right now. Futures, with a specific chart formation in mind, are supporting
       stays sluggish and corn prices don’t moderate, about the only thing you’ve got to hang your hat on
       the view of 192.12 for November and 193.10 for January. We agree with those prices 100%. A strategy for protecting future planned
       for “higher feeders” is “Hope”.
       marketings in Q1 would involve buying a January $190 put and selling a $178 put. Selling a $200 call would allow you a full $10 of
                                                                             November  6th
       upside participation. The upfront cost, separate from a small margin deposit, is about zero at current values. This will be considered
       in-place for future discussions in this commentary.
                                                                               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:
   3   4   5   6   7   8   9   10   11   12   13