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The Midwest Cattleman · September 15, 2022 · P8


       Live Cattle                                                           Feeder Cattle Daily

      Live Cattle:
         The first movement of cash trades over summer pricing has  Feeder Cattle:
      been made. Southern cattle in July traded down to $135. Most            Beef cow culling continues. Through August the year’s process-
      recent trades are $141. Futures imply a mild bounce to $144  ing is up 13.5% over last year. And last year was the largest liqui-
      next month. We expect the next moderate gain to really show by  dation in 10 years. Even though August has stepped back from the
      mid-November. a light decline in offered supply is seen. We have  heavy May – July pace, it is still quite active at 6% over last year.
      been onboard with the liquidation story and higher prices for two  We have four years of beef cow liquidation under our belt. That
      years now. We are now seeing the start of those gains. However, we  will become five next year. We would expect more serious upside
        Live Cattle:  My thoughts center around this market stabilizing now.  I’ve been  movement in prices, easing some concerns for producers, starting
      are not all-out bullish. We do have more moderate numbers than           Feeder Cattle:  All you have to do is look at the corn market for a reason for the
       placing a bullish tilt to this market for some time now.  I may need to temporarily
                                                                            pull-back in feeders. If I owned a feedlot I’d be nervous to say the least.  I do feel
      USDA. Completed placements don’t fit their Q4 and Q1 narrative  spring/summer of next year.
       place this on “hold” for a while.  The higher placements the last three months will
                                                                              The normal seasonal for January feeder cattle futures is for an
      that suggests beef production -5% and -7% respectively. Though        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
      we may not see USDA’s Q2 story either, -8% year/year, we do agree  August 1 peak and declines until December 9. This year’s peak
       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
       least the end of the year.  Beef shipments have been lagging last years’ levels now  was close on August 17. Though we are not sure if declines will
      this is where the first of the “tightening into 2026” story will really   little and they’ll head to town.....checkbooks in hand....bulging with “corn” money.
       for about a month.  Two weeks ago they were 8% lower than last year.  This weeks  fully follow the seasonals, we will agree with the potential for light
      be seen.                                                              This market will rally....wait and see.

       report showed exports a whopping 56% lower than last year.  This ain’t good.  Low   pressure still ahead.
       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 strategy are you discussing for taking advantage of these high futures prices?
       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
       going to have to kick in though in order to get it.
       A: A strategy discussed in August, buying a $154 February put, selling a $146 put and selling a $166 call as a package, allows
       a floor at $154 but still $12 of upside if it comes. This is our strategy for November – April finishing cattle. We are unhedged on
        Q #2
       future corn needs at this time and would be active with procurement given some type of harvest pressure of 40 cents lower.
        Due to the recent break in feeders, would you be holding your fall-weaned
       calves for a while or letting them go?
       Q: How are prices in the sale barn holding up?
       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: Though calf prices did begin to break in late August, as we prepare for the seasonal influx of freshly weaned numbers, this is not
       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
       too bad. Current 5# steers are 14% over last year. 7# numbers are moving at 11% over last year. We are happy with our marketing
       stays sluggish and corn prices don’t moderate, about the only thing you’ve got to hang your hat on
       strategy for coming Q1 sales. That involved buying a January $190 put, selling a $178 put and selling a $200 call. This still allows
       for “higher feeders” is “Hope”.
       for a full $10 of upside participation if higher prices are seen but also locks in a floor.
                                                                             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
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