Andrew Griffith says the cattle markets are having a bit of a problem focusing.
“Cattle markets sometimes take on the persona of an untrained dog whose attention goes something like: Bird! Squirrel! Rabbit! Biscuit!” says Griffith, Extension ag economist with the University of Tennessee.
“That seems to be where the cattle markets are today with China, snow storm, Mexico, rain, mole hills of meat, lighter carcasses, dairy cows, and the list could continue. These are all issues influencing the market, and the producer has to find a way to navigate the land mines of media and overreactions to market cattle at profitable levels.”
He says over the short-term, there is not much changing when it comes to marketing feeder cattle. Over the long haul, there are opportunities.
“Producers who will be marketing from July through the end of the year have some tools and strategies to protect prices,” Griffith writes in his weekly market outlook. “Those tools may include feeder cattle futures, Livestock Risk Protection Insurance (LRP), and in some instances forward contracting.”
He say feeder cattle futures are trading in the upper-$150s from August through November. Griffith suggests producers with 50,000 pounds of animals to sell in the summer and fall should take advantage of pricing opportunities, such as putting in a price floor or locking in prices.
“Similarly, smaller producers should consider LRP insurance to set a price floor on as few as one animal and up to 1,000 animals in today’s market environment,” he says. “The market is showing optimism for feeder cattle in August and the fall months. A producer can either sweat the market out by doing nothing, or the producer can take action and focus on growing cattle.”
Fed cattle prices were steady last week on a live basis, with prices in the $125 per hundredweight range, Griffith says. The 5-area weighted average prices through April 11 were $124.73/cwt. live, up 30 cents from the last week, and $204.62/cwt. dressed, up 59 cents from a week ago. Year-ago prices were $117.47/cwt. live and $187.62/cwt. dressed.
“Live cattle futures are displaying reasons for optimism in the finished cattle market, but beef packers do not seem to be interested,” Griffith says.
He added the upcoming start to grilling season generally results in a price spike, but says that most likely will wait until after Easter.