Live and feeder cattle have made some progress after a tough couple of months.
“Nearby and deferred live and feeder cattle contracts settled up this past week,” says Elliott Dennis, University of Nebraska assistant professor and Extension economist. The nearby August feeder cattle contract settled at $138.825, up nearly $7 from the contract low 10 days ago. The nearby August live cattle contract settled at $107, up $5.
Dennis says there were a few reasons for improving prices.
“Bottoming prices appears to have been driven by projected grain supplies, weather-driven pasture conditions and wholesale meat demand,” he says.
The markets and analysts were trying to sort out crop acreage and what impact that could have for livestock markets.
“There was some market confusion about the ‘true’ number for corn and soybean acreage reported by the USDA on June 28,” Dennis says. “Corn acreage handily outpaced market expectations, while soybeans were well below market expectations. In response, and to paint a more accurate crop size and planted area, the USDA announced that it would resurvey farmers in advance of the Aug. 12 Crop Production report.”
Dennis says markets are still sorting out the impacts of heavy precipitation and flooding.
“Further complicating the message from this report are prevent plant acres,” he says. “Current market commentary suggests that prevent plantings will be dramatically higher across all major corn and soybean growing states.”
Even as the weather has turned hotter, pastures conditions remain in good shape relative to other recent years.
“Pastures in poor or extremely poor condition in the Midwest are 5-15% lower over the three-year average,” Dennis says. “High quality pastures should incentivize cow-calf and stockers to retain cattle longer. Likewise, with the recent USDA announcement waiving the Nov. 1 grazing requirement on prevent planting acres, the summer grazing window may extend much longer this year.”