Varilek’s Cattle Call: Grains, gains and pains
The grains are stealing the headlines this spring for good reason. Corn prices are higher than they have been since 2014. The wet spring in such a large geographic area is one that we have not seen before. Therefore figuring cost of gains for new purchases will be more of a challenge and will require some analysis from a nutritionist if you do not have the capability. Currently feedyards seem to be racing purchasing old crop corn just to have some physical product, but the corn that is left is in strong hands. The farmers with crop left by now are poised to hold out for a higher price.
In my opinion, corn prices continue to put a bullseye on fall feeder prices. Couple that with the feedyards lack of profitability, producers will be looking at difficult purchasing this fall. It is nothing new that buyers and sellers of fall feeder calves have differing opinions on where calves should be price, however, the gap seems to be more notable this spring.
Beef production is at 2.33 billion pounds year to date which was an increase of one percent year to date. Part of the increase is from the higher heifer slaughter at 8 percent more than a year ago with steer slaughter 2.4 percent under a year ago. I believe we are seeing a decrease in cow herd size for years to come. In my opinion, the cattle cycle I learned about in my days as a jackrabbit is still evident.
The cattle on feed report Friday showed 97 percent placed, 101 percent marketed, and 102 percent on feed with all numbers close to pre-report estimates. Live cattle cash prices ranged from 180-183 dressed in the north early in the week. The south trade slipping from 110 to 108 was the tipping point for futures last week which made some fresh contract lows. Welcome to the sloppy summer markets of the cattle industry.
Scott Varilek, Kooima Kooima Varilek Trading
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