Page 8 - MWC 02-04-2021s
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The Midwest Cattleman · February 4, 2021 · P8


       Live Cattle                                                           Feeder Cattle Daily

      Live Cattle:
         At the time of this writing the continuous buildup of gener-       Feeder Cattle:
      ally positive news impacting mid and late year cattle pricing is        The positive news flow for fed cattle pricing is not just from a
      now spilling over into the short term picture. Wholesale beef has     feed cost hit to placements and perhaps a better economy later
      advanced $24 over 20 days. It is currently priced 8% over last        this year. There is a significant contribution from ranchers. Gen-
      year. Feed cost issues should mean a decline in placements in         eral light liquidation in the industry is now being felt with small-
      January and likely again in February, impacting August – No-          er beef cow numbers as well as calf crops. The decline is not dra-
      vember fed cattle supplies.                                           matic but any light drop in supply at this time will be closely
         Cash cattle, even with higher pricing in late January, is run-     watched.
                                                                              Without the slow decline in offered calf numbers the current
      ning 7% under last year. Weight data suggested a larger supply           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
      of over-fed cattle than the trade expected to see. Given this data    price discounts vs. the prior two years, -3% and -5% respectively,
                                                                            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
      is delayed, we would suggest we are mid-way through cleaning          it could be worse. We will monitor that situation closely. We ex-
       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
       have a negative impact on prices yet, so like they say, “All good things come to those  pect a peak in feed costs likely this month then a couple months
      up this supply in the first week of February. The supply/demand       further.  The early corn harvest has most feeder buyers in the field and I don’t think
       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
      situation for Q1 itself is not bullish. Finished cattle numbers       of lower pricing before the big weather events this summer come
       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.
      will run higher than last year due to larger placements this past     into play. For long term farm/ranch planning, we would still sug-
                                                                            This market will rally....wait and see.
       for about a month.  Two weeks ago they were 8% lower than last year.  This weeks
       report showed exports a whopping 56% lower than last year.  This ain’t good.  Low  gest moderately higher calf prices over the next three years based
      July – September. It will be in the March/April time that offered
       imports and high exports have held this market up all summer.  We’re starting to  on industry contraction and slightly larger fed cattle processing
      cattle numbers begin to change. Summer and beyond will hold
       lose some of that.  I just can’t pull the trigger yet on long term bullish hopes.
      smaller numbers and potentially, an improved demand setup.            capacity.
                                                                                                  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: How aggressive should I be with price protection this year?
       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: Though everyone has supportive expectations for prices this year, it really will not be a valid issue until later
       going to have to kick in though in order to get it.
       this year. For instance, we see the October at $123 and December at $125. We would be more interested in sales
        Q #2
       for first half marketings. The April contract at $124 would be a good place to start.
        Due to the recent break in feeders, would you be holding your fall-weaned
       Q: With feeder prices stumbling right now should I delay my planned normal marketings in
       calves for a while or letting them go?
       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
        A: In the short term yes. And if you have the forage, perhaps holding them into spring would allow for better
       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


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