Page 8 - MWC 9-15-2022s2

The Midwest Cattleman · September 15, 2022 · P8

MARKET REPORT

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.
rnelson@allendale-inc.com 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
Auction

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: reynoldscattle@cvalley.net