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The Midwest Cattleman %u00b7 October 24, 2024 %u00b7 P8November6thWhat Does this Report Mean to Me?MARKET REPORTLive Cattle Feeder Cattle DailyLive Cattle: My thoughts center around this market stabilizing now. I%u2019ve been placing a bullish tilt to this market for some time now. I may need to temporarily place this on %u201chold%u201d for a while. The higher placements the last three months will have a negative impact on prices yet, so like they say, %u201cAll good things come to those who wait%u201d. I see production numbers staying over last years%u2019 levels until at the least the end of the year. Beef shipments have been lagging last years%u2019 levels now 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%u2019t good. Low imports and high exports have held this market up all summer. We%u2019re starting to lose some of that. I just can%u2019t pull the trigger yet on long term bullish hopes.Feeder Cattle: All you have to do is look at the corn market for a reason for the pull-back in feeders. If I owned a feedlot I%u2019d be nervous to say the least. I do feel the feeder market has overdone it to the downside and it will be tough to break it further. The early corn harvest has most feeder buyers in the field and I don%u2019t think they%u2019ve really had time to concentrate on buying feeders. Let%u2019em get caught up a little and they%u2019ll head to town.....checkbooks in hand....bulging with %u201ccorn%u201d money.This market will rally....wait and see.Trading commodity futures involves substantial risk of loss and my not be suitable for all investors. The recommendations express opinions of the author. The information they contain is obtained from sources believed reliable, but is in no way guaranteed. 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. Allendale Inc.Q #1What do you think the price of fats will be in April 2011Answer: It%u2019s 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 going to have to kick in though in order to get it.Q #2 Due to the recent break in feeders, would you be holding your fall-weaned calves for a while or letting them go?Answer: What ever happened to the easy questions? This will depend upon your weaning schedule and your available feed supply. I%u2019m long term bullish the feeder market but the %u201creality%u201d 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....%u201dsell%u201d $4.50 corn. If the fat market stays sluggish and corn prices don%u2019t moderate, about the only thing you%u2019ve got to hang your hat on for %u201chigher feeders%u201d is %u201cHope%u201d.Rich Nelson Allendale Inc. 815-578-6161rnelson@allendale-inc.comLive Cattle:Including our estimate of the coming Cattle on Feed report covering September, the prior nine months of feedlot placements will have run -2.1% year/year. This group of inflows determines fed cattle supply from Q4 through much of Q2. When keeping cow cull numbers a little trim you%u2019re looking at offered slaughter perhaps -3% to -5% in the quarters ahead. If we assume weights remain at current +2.5% year/year numbers, we agree with USDA%u2019s current view of light -1% to -2% beef production. We also agree the next real change in supply will come mid-next year.Concern over future US beef demand has been reined in. Current beef production levels, +2% year/ year, are managing to result in cash cattle and wholesale beef prices +2% to +3%. As it stands the most recent employment, inflation and retail sales numbers imply stability at this time. Futures currently imply recent $187 trade in the South will ease to $185/$186 and remain there through spring, +2%.Feeder Cattle:Even with a little concern over future beef demand, the base unit of production is holding pricing well. Cash cattle is priced +2% year/year, feeders +3% and calves +10%. The coming Cattle on Feed report will show an update on steer and heifer numbers in the feedlot as of October 1. That may give us light ideas on heifer retention in the early phase of fall weaning and marketing. The prior July 1 numbers show the second largest percentage of heifers in the feedlot since 2001. For now, we are hesitant in showing big panic over beef demand. We have learned to respect the US consumer%u2019s love affair with beef.Q: What remains for feed pricing?A: US supply arguments are over until January. Demand, which at least for corn is positive, suggests pricing below $4.00 futures may remain limited. Separate from any concerns over futures pricing, even in heavy supply years, basis typically advances 14 cents from here into February. On the futures side, separate from any trade war concerns with China headed into the election we suggest $4.40 futures is fair value. Feed buyers should have all needs through December locked up via both basis and calls. As with prior suggestions, feeder procurement through March should be locked in via purchased futures.Q: What is the update with contraction/expansion?A: The cattle cycle is stuck in neutral after our recent light contraction. We don%u2019t see any big change in heifer retention from this fall weaning. The widening dryness since August has likely dashed hopes for now. In addition, the next phase of beef supply tightening won%u2019t really start until mid-year ahead. Next fall is our likely guess.