Page 8 - MWC 03-11-2021
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The Midwest Cattleman · March 11, 2021 · P8


       Live Cattle                                                           Feeder Cattle Daily

      Live Cattle:
         The 2/6 – 2/19 cold snap further entrenched the trade in the belief   Feeder Cattle:
      cash cattle will finish out the rest of March with minimal change       We have previously noted the beef cow herd is at six year lows.
      from the start of the month. Based on the delayed weight data we      This year’s January report on herd numbers also showed some light
      have, and anecdotal reports from feedlots currently, the nation’s     heifer holdback beginning. But that is just one portion of the pro-
      feedlots did not see a major shakeup in weight gains. As it mainly    cess of expansion and contraction. The other thing to monitor is cow
      impacted processing, this means we will have a minor backup in        removal. Over the first six weeks of the year, beef cow culling is 4%
      ready numbers in the short term. The first declines in supply, where   over last year. Every long term indicator continues to suggest slow
      they normally are, will show in summer due to this past fall’s place-  declines in calf crops for the next two years if not more.
                                                                               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
                                                                              Though we do not forecast a major change for feed prices over the
       placing a bullish tilt to this market for some time now.  I may need to temporarily
      ment structure. A normally well-supplied summer may not be the        pull-back in feeders. If I owned a feedlot I’d be nervous to say the least.  I do feel
       place this on “hold” for a while.  The higher placements the last three months will  next year we can suggest a stronger pull on calf and feeder prices
      case this year. That could also be true when considering demand.      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   later this spring/early-summer.
                                                                            further.  The early corn harvest has most feeder buyers in the field and I don’t think
         This week Texas took significant steps to remove virus-related
       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
      restrictions. Separately, the president indicated enough vaccine for   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
      every US adult would be manufactured by the end of May. In the        This market will rally....wait and see.
       for about a month.  Two weeks ago they were 8% lower than last year.  This weeks
      market’s belief, these are markers for a better demand road as the
       report showed exports a whopping 56% lower than last year.  This ain’t good.  Low
       imports and high exports have held this market up all summer.  We’re starting to
      coming months progress. We continue to suggest $117 for economic
       lose some of that.  I just can’t pull the trigger yet on long term bullish hopes.
      value on the April and June contracts.
                                                                                                  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: It is time to lock in prices on future feeder purchases?
       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: Right now, there is a good combination of high feed costs, a short term moribund cash cattle trade
       going to have to kick in though in order to get it.
       and deferred cattle futures that are still fresh from a good removal of premium. On top of that, we may
        Q #2
       have one more small dip in pricing as winter wheat feeders hit the market. Lock in current and deferred
        Due to the recent break in feeders, would you be holding your fall-weaned
       feeder purchases this month. Buying the May $146 feeder cattle call and selling the May $156 feeder
       calves for a while or letting them go?
       cattle call could protect $10 of upside for a current price of $2.50 with no margin calls.
       Answer: What ever happened to the easy questions?  This will depend upon your weaning sched-
       Q: Are you still holding to the idea of delaying this year’s feeder marketings?
       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
       A: If you have forage, and also noting the improved March/April precipitation forecast, yes.
       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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