Page 8 - MWC 2-2-2023s
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The Midwest Cattleman · February 2, 2023 · P8


       Live Cattle                                                           Feeder Cattle Daily

      Live Cattle:
         The cattle trade has been looking forward to 2023 for some         Feeder Cattle:
      time. Four prior years of breeding herd liquidation finally make        For Tuesday’s bi-annual cow-calf survey, called the Cattle re-
      their way to feedlot numbers. We see the year’s beef production       port, we expected a 4% drop in beef cows vs. last year. 2022 posted
      dropping 4.0% to 27.260 billion lbs. That is the smallest in three    the largest liquidation of beef cows, when compared against the
      years. The next two years after this are set for even tighter num-    starting herd size that year, in over 50 years! Though the trade is
      bers. Cash cattle rallied a full $14 in the prior fourth quarter to   still discussing potential for recession that concern has been less-
      price in much of Q1 expectations.                                     ened in recent weeks. Current sale barn pricing is +11% vs. last
         We currently forecast final prices for February live cattle at     year for feeders and +8% for fall born calves.
        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
      $155. April and June are expected at $158 and $154 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
      Remember, June is normally a bearish month. Last year it saw          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
       have a negative impact on prices yet, so like they say, “All good things come to those
      cash cattle trades down to $135. Normally we stick to our price       further.  The early corn harvest has most feeder buyers in the field and I don’t think
                                                                            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
      models quite closely. For this year, when every quarter past this     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
      is one of tightening supplies, don’t be surprised if premiums are     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
      added over economic value. A counterpoint to tight supplies is
       imports and high exports have held this market up all summer.  We’re starting to
      the expectation of a slight setback to US consumer demand. We’ll
       lose some of that.  I just can’t pull the trigger yet on long term bullish hopes.
      simply move down from “unbelievable” demand in 2021 and 2022
      to “incredible” for 2023.                                                                   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 recommendation for feedlots?
       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: In the last issue of this publication we noted protection for Q1 fed cattle using a three position strategy using options. A
       going to have to kick in though in order to get it.
       floor was laid out on the February at $154 but the strategy allowed one to benefit at higher prices. We have no interest in further
        Q #2
       hedges. In the October issues of this publication we recommended having all 2023 feeder cattle needs fully bought. We still feel
        Due to the recent break in feeders, would you be holding your fall-weaned
       the same. On the feed side of things stay hand to mouth for much of this year. We look for much lower corn pricing this year.
       calves for a while or letting them go?
       Q: What are you hedging plans for cow/calf producers?
       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 August series of this publication we discussed protection from falling prices for planned Q1 feeder sales. That was
       right now probably dictates letting them go.  If you keep them for an extra 30 days, make sure you
       lifted in the October publications. We are not interested in any serious hedges this year from a cattle supply basis. Producers may
       minimize the grain in the ration.  Grow them on good forage....”sell” $4.50 corn.  If the fat market
       suggest current prices, though higher than last year, appear to be a bit too benign. We look for further gains later this spring on the
       stays sluggish and corn prices don’t moderate, about the only thing you’ve got to hang your hat on
       expectation for steep declines in corn pricing.
       for “higher feeders” is “Hope”.
                                                                             November  6th


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                                                                                   Sale at 12:30
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                                                                              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
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