Now is a good time for cow/calf producers to look at what the feeder cattle futures market has done the past several months and consider the spring marketing plan, said Tennessee State University Agricultural Economist Andrew Griffith in his weekly newsletter.
Using the Jan contract, it is easy to see that the market has had a peak and a valley and is now on the upswing, he said.
Jan feeder cattle were trading just shy of $140 per cwt in early August. The market then spent 10 weeks moving lower where it reached a low just under $111. The market lost $29 per cwt, which had cow-calf producers questioning if there was any way to make a living with cattle.
Since the middle of October, the Jan contract has moved north of $130 in about a nine-week span, he said. Drastic price swings have been in the market for more than three years now, but three years of studying the chaos provides very little insight as traders continue to dominate the market.
The key for producers is to manage costs, Griffith said.
2017 PRICES SEEN LOWER
There are no guarantees in the cattle business, but it is almost a guarantee that average calf and feeder cattle prices will be lower in 2017 than in 2016, Griffith said. It is unlikely the market will make an extremely strong run in 2017.
Similarly, one would think it would be difficult for cattle prices to press much lower than this fall, he said. If history is an indicator, the market will continue to be in flux next year, but price swings should not be as exaggerated as they have been in 2016.
Griffith encouraged producers to look for pricing opportunities for 2017 marketing now. The futures market and LRP insurance appeared to be poor excuses for price risk management, but there is no doubt producers now wish they had used it for fall feeder cattle marketing, he said.
ALTERED FEEDING TIMES MIGHT HELP
One thing that might help with cost cutting is to decrease the level of unsupervised night-time calving among first-calf heifers.
Glenn Selk, Oklahoma State University Emeritus Extension Animal Scientist wrote for the university’s Cow/Calf Corner, said recent research indicates that early evening feeding of these future mommas might be to go to an early evening feeding schedule. There is an inverse correlation between the amount of activity in the rumen with the urge to begin the calving process.
“The easiest and most practical method of inhibiting nighttime calving at present is by feeding cows at night,” he said. “The physiological mechanism is unknown, but some hormonal effect may be involved.”
Getting heifers to calve in the daytime when it’s easier to keep track of their progress is the best way to increase calving success, Selk said.
CASH CATTLE TRADE HIGHER
Average Superior auction prices last Wednesday were $2.21 per cwt higher at $112.68, versus $110.47 a week earlier. Cash cattle then traded at $113.25 to $114 on a live basis, up $2.50 to $3.25. Dressed-basis trading was up about $4 at $174.
Thursday, cattle traded at $114 to mostly $115 to $116 live and at $180 dressed.
The USDA’s choice cutout Tuesday was $0.27 per cwt higher at $198.54, while select was up $3.83 at $191.27. The choice/select spread narrowed to $7.27 from $10.83 with 59 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Monday was $132.40 per cwt, down $0.26. This compares with Tuesday’s Jan settlement at $129.95, down $0.77.