Page 8 - MWC 8-6-20s

The Midwest Cattleman · August 6, 2020 · P8

MARKET REPORT

Live Cattle Feeder Cattle Daily

Live Cattle: Feeder Cattle:
Positive, retail prices were even stronger than expected in Q2. A quick look at the pricing chain tells an important story. We
The pull on prices was even more than expected from the lower are putting out more production than last year due to weights.
output. End user procurement for Aug – Oct needs is running Wholesale beef is therefore -6% year/year. With a processing back-
far over last year. Wholesale beef is finding a short term bottom log, and large inefficiencies at the plants, finished cattle are -13%.
in preparation for Labor Day needs. This has also been shown in However, the latest sales for feeders and calves are running at
cash which has been stable/firm recently. Processors will begin only a 1% discount to last year. Much of this is from the belief
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
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
to work on the backlog when those low spring placement num- these 2021 finished animals will hit the market in a different pro-
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
bers come out of feedlots starting in October. cessing environment. There is something else to discuss too.
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
The bi-annual survey of cow/calf producers, released on 7/24
On the other hand, we will not be returning to normal for
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
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.
some time. Virus findings in the Midwest and Plains could keep via the Cattle report, confirmed the industry’s five years of expan-
for about a month. Two weeks ago they were 8% lower than last year. This weeks
This market will rally....wait and see.
the labor issue front and center. Also, fed cattle prices will hold sion are over. This year’s beef cows, at 0.8% lower year/year, may

report showed exports a whopping 56% lower than last year. This ain’t good. Low
their larger-than-normal discount to wholesale beef for another be the start of a minor contraction phase. Expect stable prices this
imports and high exports have held this market up all summer. We’re starting to
two months. Some also suggest the true impact from lost jobs year and higher action over the next two.
lose some of that. I just can’t pull the trigger yet on long term bullish hopes.
has not been felt just yet.
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: How long will this rally last?
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 see $110 on the October fed cattle contract.
going to have to kick in though in order to get it.
Q #2
Q: What is the price outlook for feeders now?
Due to the recent break in feeders, would you be holding your fall-weaned
A: Our $138 upside target for August feeders, discussed in the last spring issue, has been reached. Those
calves for a while or letting them go?
planning for normal sales ahead in Q1 may want to take advantage of the fact January ’21 futures are equal
Answer: What ever happened to the easy questions? This will depend upon your weaning sched-
with the expired January ’20 price. A purchased $140 put and sold $148 call offers a floor for producers but
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
the potential to still participate in higher prices, to an extent, if offered. After a conversation about risk with
minimize the grain in the ration. Grow them on good forage....”sell” $4.50 corn. If the fat market
licensed representative, a $2/cwt. upfront cost and a reasonable margin deposit may provide security.
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