Page 8 - MWC 10-6-2022s
P. 8

The Midwest Cattleman · October 6, 2022 · P8


       Live Cattle                                                           Feeder Cattle Daily

      Live Cattle:
         The fed cattle trade has reigned a portion of its expectation for   Feeder Cattle:
      higher prices in the months ahead. Fed cattle slaughter in recent       Seasonal pricing pressure in the sale barn has been a little
      weeks was 3% over last year. Weights add on another 0.5% to           tougher than  expected.  We’re still holding premiums to  last
      that. Six months of feedlot placements little changed from last       year’s pricing but that premium has slipped. In early September
      year insure adequate supplies through Q1. The biggest wildcard,       feeders sold for +17% year/year. They are now +13%. Calves, now
      consumer demand ahead, is still front and center though. Two          at their seasonal low in pricing, fell from +22% year/year to now
      prior quarters of lower than last year economic activity, and a       +15%.
        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
                                                                              The normal seasonal for January feeder cattle futures is for an
      stock market making new lows in the short term, are issues.           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
       place this on “hold” for a while.  The higher placements the last three months will  August 1 peak and declines until December 9. This year’s peak
         Fat cattle don’t have a bullish story through Q1. Recession
                                                                            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’t think
       have a negative impact on prices yet, so like they say, “All good things come to those
      talk is front and center during this time. There is a looming, sig-   was close on August 17. Given the severity of price declines al-
                                                                            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
      nificant, supply decline still waiting for us in 2023. Even includ-   ready under our belt we are suggesting it is about at the needed
                                                                            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
       for about a month.  Two weeks ago they were 8% lower than last year.  This weeks  price low.
      ing recession talk we would look for pricing support in later Q2      This market will rally....wait and see.
       report showed exports a whopping 56% lower than last year.  This ain’t good.  Low
      and beyond.
       imports and high exports have held this market up all summer.  We’re starting to
       lose some of that.  I just can’t pull the trigger yet on long term bullish hopes.
                                                                                                  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 latest update on hedging?
       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 holding the hedge discussed in August. A purchased $154 February put, sold $146 put and sold $166 call
       going to have to kick in though in order to get it.
       allows $8 of downside protection but a full $12 of price appreciation from that floor. Though February futures have now hit
        Q #2
       our downside target, we’re not too big on lifting hedges in a time of uncertainty like this. The next big recommendation for all
        Due to the recent break in feeders, would you be holding your fall-weaned
       feedlots is securing pricing on all planned 2023 feeder purchases. We would do that right now. Corn prices are still unhedged at
       calves for a while or letting them go?
       this point. We would be interested on something below 640 for December if given the chance.
       Answer: What ever happened to the easy questions?  This will depend upon your weaning sched-
       Q: How much downside is still left in the sale barn?
       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
       A: The feeder cattle protection strategy discussed in August has worked great. That involved buying a January $190 put, selling
       minimize the grain in the ration.  Grow them on good forage....”sell” $4.50 corn.  If the fat market
       a $178 put and selling a $200 call. Though feeders typically have a few more weeks of pressure ahead we would lift all hedges on
       stays sluggish and corn prices don’t moderate, about the only thing you’ve got to hang your hat on
       these numbers. We still believe the feeder side, before fats, will hold the best upside in the coming six months.
       for “higher feeders” is “Hope”.
                                                                             November  6th

                                                                               Lunch at 11:00 a.m.
                                                                                   Sale at 12:30
                                                                                      Sale Offering
                                                                              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
                                                                              16 - Spring Calving Black Females  Reynolds Herefords
                                                                                      Bred to Hereford Bulls
                                                                              8 -    Fall Calving Pairs          1071 County Road 1231
                                                                              6 -    Show Steer Prospects
                                                                              Both Horned & Polled Offered        Huntsville, MO 65259
                                                                                                          Home: 660-277-3679 • Matt: 660-676-3788
                                                                               November 5, 2010 Sale offerings on
                                                                                      Display 3:00 P.M.
                                                                                    CHB Dinner at 6:00 P.M.        • Barb: 660-676-4788
                                                                                   Call or E-Mail for Catalog  Email:
   3   4   5   6   7   8   9   10   11   12   13