Page 8 - Sep302021

The Midwest Cattleman · September 30, 2021 · P8

MARKET REPORT

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.
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 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
December.
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
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