Page 8 - MWC 3-31-2022s
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The Midwest Cattleman · March 31, 2022 · P8


       Live Cattle                                                           Feeder Cattle Daily

      Live Cattle:                                                          Feeder Cattle:
         Cattle feeders are disappointed that rebounding wholesale beef       Feeder cattle prices were hit in early March as cow/calf produc-
      prices since 3/8 have yet to translate into higher cash cattle trade.  ers were eager to market their cattle. Continued concerns over
      Three weeks in a row at $138 have been noted. Futures, with a  moisture and forage, high feed prices and concerns over struggling
      normal positive basis at this time of year, are pricing in the pos- fed cattle pricing was noted. In the short and medium term this
      sibility of cash up to $143 before the big seasonal hit of finished  means a good supply of fed cattle through August. With generally
      cattle shows this spring. The seasonal supply issue up ahead is  smaller calf crops it means those feeders not yet in feed yards will
      compounded by two factors, July – February placements were +2%  be at a relatively light supply. On top of this, the next drop in calf
                                                                               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
      year/year and current cattle weights are about 2% over last year.  supplies will start to show in five months when 2022 calves begin
                                                                            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
      The benefits of this winter’s mild feeding period are apparent.       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  to show up.
       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
         We  still  suggest  US consumer  demand will  increase here  in
       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
      2022. As a whole, consumers are doing just fine as a recovery from    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
      the two virus years continues. We do question 2023 demand if the      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
      Federal Reserve increases interest rates too quickly. Though there
       imports and high exports have held this market up all summer.  We’re starting to
      is an on-again/off-again relationship between cattle prices and the
       lose some of that.  I just can’t pull the trigger yet on long term bullish hopes.
      stock market, the beef trade is quite wary of a general recession.
                                                                                                  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 view on summer fed cattle pricing?
       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’re still suggesting $135 and $132 downside targets for April and June/August futures. This would be a problem
       going to have to kick in though in order to get it.
       against $138 - $142 fed cattle breakevens according to KSU. Sales on the August at $140 in the coming weeks would
       be advised. Separately, from the last issue we have corn pricing hedged using a July 740/840 call spread. Future feeder
        Q #2
        Due to the recent break in feeders, would you be holding your fall-weaned
       purchases are locked in $166 via the May contract.
       calves for a while or letting them go?
       Q: What will the 3/31 acreage report tell us about forage?
       Answer: What ever happened to the easy questions?  This will depend upon your weaning sched-
       A: A long term problem for cow/calf producers is forage. This is not just a concern about weather, but acreage. For all-
       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
       hay, there were only 50.7 million last year. That is down sharply from 63.5 just 20 years ago. We don’t see that changing
       minimize the grain in the ration.  Grow them on good forage....”sell” $4.50 corn.  If the fat market
       for 2022. The 3/31 Prospective Plantings report will give the trade an estimate on harvested hay ground for 2022.
       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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