Hope for an improved fall calf market
With a strong futures market next spring and predicted lower cattle numbers nationwide, the outlook for calf prices this fall is cautiously optimistic. But feeders, ranchers and salebarn owners alike agree that if price transparency isn’t achieved, the entire industry will continue to suffer severely.
February, April and June of 2022 live cattle futures on the Chicago Mercantile Exchange are all valued over $130 cwt at press time, which is $10-$14 cwt higher than 2021 June live cattle futures. Which would mean $200-$300 higher live cattle prices in 2022, if cash prices match those futures values next year.
Lemmon Livestock, Inc., owner Paul Huffman, believes that the cattle cycle could help lift cattle prices this fall, to values slightly over last fall’s.
“Since I was 14, it has been pretty consistent. The first half of each decade tends to be higher prices and in the second half, prices go down,” he said.
Huffman pointed out that the Packers and Stockyards division of USDA keeps a close eye on his business and other salebarns across the country, but he believes the big four packers are not under the same scrutiny.
Congress needs to get tough on P and S, and call for enforcement of existing rules, he believes. “P and S needs to do something, and they have to be backed up. The packers are corrupt and they don’t do anything about it,” he said, referencing price disparity between boxed beef prices and live cattle prices which are allowing the big four packers to pocket around $1,000 per head in recent weeks while cattle feeders hope to break even.
Cattle feeder and buyer Randy Weigel of Napoleon, North Dakota, said that strong April and June 2022 futures values offer some hope for strong calf prices this fall, but he has concerns that the cash value next spring won’t align with the futures market.
“The futures prices have been higher but when it comes time for the spot market, we never seem to get there,” he said.
“We need beef prices to come down and fat cattle prices to go higher. Meat is at record levels, us producers are not getting a fair piece of the pie and that’s what concerns me,” he said.
“We have to figure out how producers can get part of the packer profits,” he said. The low percentage of “spot market” sales is a major problem, he said.
“It’s a disaster. There are too many packer arrangements,” he said, which makes value discovery impossible at times.
Cattle feeder and producer Cory Hart from Chaseley, North Dakota, is hopeful that stronger futures will give feeders the ability to lock in profits and allow them to pay good prices for calves this fall.
Feed, including corn prices and availability along with hay and other feedstuffs will be the wild card, and for much of Tri-State Livestock News coverage area, the drought is heightening concerns.
“There is good optimism. If the cow calf guys can keep their herds together through this drought, they’ll hopefully be rewarded with good calf prices. If we don’t have another black swan event,” he said.
“Feed is the million dollar question. We have four months to figure out what we’re going to have and how we’re going to get it put up or get some back to the home base without liquidating a lot of livestock.”
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