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The Midwest Cattleman · September 30, 2021 · P8


       Live Cattle                                                           Feeder Cattle Daily

      Live Cattle:
         There are no changes to the generally supportive medium term  Feeder Cattle:
      supply arguments as we head into Q4 and Q1. Cattle slaughter            The area of beef pricing we have been most surprised about is
      may fall from current levels of -0.5% vs. two years ago to -2.0%  the feeder end. Futures spent almost a full month reducing expec-
      in Q4. Q1 will be the sweet spot for the coming supply tightness  tations of future prices. Demand arguments are hard to counter
      ahead. There are no changes to the generally longer term positive  given the fact we won’t know if they hit retail demand until weeks
      price implications for 2022 – 2025 based on general cow liquida- after. Supply arguments are generally higher confidence but the
      tion.                                                                 trade often likes to see it change before they believe it.
         But demand expectations have changed quite a bit since the           Calf prices are down $16/cwt. since their peak in July. That is
      last publication at the start of the month.  There are renewed  relatively expected given the seasonal supply push for 5-weight
      concerns over virus numbers and virus-related labor problems  calves in the fall. Compared with two years ago, this fall has not
                                                                               Feeder Cattle:  All you have to do is look at the corn market for a reason for the
      at our plants.  Additional issues are the mixed economic data in  been bad. Prices went from +20% vs. two years go to +16%. We are
        Live Cattle:  My thoughts center around this market stabilizing now.  I’ve been
       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
      September and the Fed’s plan to reduce easy monetary policy in  still holding onto premiums. Also, considering there has been a
                                                                            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
      the months ahead. How much any of these factors hit US con- good interest in calf marketings this year, it is not that bad.
       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
      sumer demand is a separate question. As you know, beef demand         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
      increased before and during the virus. The trade is revising its      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
      view of later-virus demand. For now, these are simply psycholog-      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
      ical factors in a market that has ignored demand concerns over
       imports and high exports have held this market up all summer.  We’re starting to
      the prior 18 months. We have lowered our $128 futures expiration
       lose some of that.  I just can’t pull the trigger yet on long term bullish hopes.
      target for October down to $127. Our target for December futures
      remains at $134.
                                                                                                  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 should feedlots do at this time?
       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 would lock up all current and coming feeder cattle needs for the next six months, now.
       going to have to kick in though in order to get it.
       Additionally, we would lock up corn needs for the next six months on any attempts to $5.10 the
        Q #2
        Due to the recent break in feeders, would you be holding your fall-weaned
       Q: Still bullish calf/feeder pricing?
       calves for a while or letting them go?
       Answer: What ever happened to the easy questions?  This will depend upon your weaning sched-
       A: Though the January feeder cattle target has been lowered to $170, it is still supportive. Those who are
       ule and your available feed supply.  I’m long term bullish the feeder market but the “reality” of
       marketing calves right now may be interested in a $162/$172 bull call spread purchased for $2.25/cwt.
       right now probably dictates letting them go.  If you keep them for an extra 30 days, make sure you
       This provides four months of re-ownership with no margin calls.
       minimize the grain in the ration.  Grow them on good forage....”sell” $4.50 corn.  If the fat market
       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

                                                                               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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