Feeder cattle sales are beginning to pick up in the Southeast, even if producers would rather hold on to them a little longer.
University of Tennessee Agricultural Economist Andrew Griffith said in his weekly comments that low prices in September and October had many producers hanging on to calves a little longer than normal. However, small price improvements in November and drought conditions have encouraged producers to “set wheels under calves” the past couple of weeks.
As a result, feedlot placements could rise in November even though they normally go down, market analysts said. At least, November placements might not crash as hard as normal.
Griffith said, “The market will likely continue to see strong runs of calves the first couple of weeks in December as producers try to move calves before the holiday break that many auction markets will take.”
Rising calf prices are being recorded in most major calf-growing areas of the US, according to USDA Agricultural Marketing Service data. But it’s particularly significant in the Southeast where extreme drought has gripped large areas of Mississippi, Georgia and Tennessee.
COWS ALSO MOVING
In addition to the increased calf movement, from the Southeastern states, Griffith said the severe and exceptional drought situation that covers much of Tennessee has resulted in cow/calf producers culling more cows than normal.
The Fall grass situation is “one of the worse witnessed in many years,” he said. Late summer forage growth was minimal, knocking out the opportunity to harvest cool-season grasses.
However, Griffith saw a silver lining in the drought situation and the resulting pain of having to cull cows. The experience should “provide a great educational moment,” for affected producers.
It should motivate them to reconsider stocking density, altering forage specie mix and encourage some to consider purchasing more pasture, rangeland and forage insurance in coming years.
PRICES OFFER OPPORTUNITIES FOR OTHERS
But, as is often the case in US cattle markets, one person’s pain is another’s opportunity. Such is the case with the Southeast drought.
Market prices for calves continue to offer favorable opportunities for backgrounders before sending them to the feedlots. Most of these backgrounding opportunities exist outside of the drought area, though.
The problem in the Southeast remains a shortage of forage. Those who generally used stockpiled forages and winter annuals to background calves should be cautious not to overstock pastures, he said.
It would take significant rainfall to activate late-growth potential for sustained forage growth, he said.
And, instead of backgrounding feeder calves, Southeastern producers may want to look into pasturing light-weight cows over the winter. They gain well on moderate-quality forage and can really do well if good forage is available.
And, Griffith said he expects cow prices to improve toward the end of winter and through the spring.
CASH CATTLE MARKETS QUIET
No cash cattle trading was reported Monday, although this week’s action could take place early before the Thanksgiving Day holiday.
Cattle sold last week from $107.50 per cwt on a live basis to $110, mostly $108, up about $3, and at $168 to mostly $170 dressed, up $10 to $12.
Wednesday, cattle sold in the online Superior Auction at $105.50 to $108.25 in the south to $103.25 to $108.25 in the north.
The USDA’s choice cutout Monday was $2.73 per cwt higher at $185.68, while select was up $1.72 at $168.73. The choice/select spread widened to $16.95 from $15.94 with 80 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Friday was $127.22 per cwt, up $0.22. This compares with Monday’s Jan settlement at $124.17, down $0.80.