Nov. 6, 2018
Last week I mentioned we had treated some of our fall calves for pneumonia. Yesterday we brought the entire set of calves in with the cows and treated every calf. These cattle are out on pasture, but they are having a hard time fighting the weather. The vet told me that this problem is pretty widespread.
There have been 80 dairies closed this year in Iowa. A client of mine in Tennessee told me the situation is similar there. It is putting pressure on the cow market in addition to the beef cows that are being culled.
Last week, a fat cattle buyer told me he had bought two loads of cattle on the hoof. Both loads had 70 percent grade fours on them. His boss told him to go get more cattle from the feedyards and forget about those which are farmer fed.
On Monday, Nov. 5, we saw a total collapse of the live cattle and feeder cattle on the board. I think this is pretty much the funds coming out of the long side of the market, and maybe looking at not being long the cattle market as they have been for the past 90 days. The cattle charts look as if we may be getting ready for the third wave down on feeders and also the third wave down on fats.
We did get a rally in the cash cattle. Now we have to wait to see if we can hold it together.
It was a volume contract high day in January feeders. This may either be a high or a low — we will know more by Thursday.
Meat sales were great last week. Twenty-two-days-and-up box sales were 844, NAFTA 100, and overseas exports 650 loads. This is way off of the previous week but still over 700 loads, which is a base figure.
There is approximately the same number of feeder cattle coming on as we had last year. I still expect the next three years to be good for cattle feeding, but how these cattle are purchased will make a world of difference on the bottom line.
I think we have put the low in the grain market. President Trump’s tweets regarding talks with President Xi were probably election rhetoric. The topping of the dollar may be imminent, especially if the stock market is unable to hold its gains. It wouldn’t surprise me to see a break in the grain market, but I think we have seen the last of the funds in the short side of grain.
It would be advisable to cover feed needs for next year because of the wide basis, especially on the cash, if you have storage room. If storage isn’t available, short term calls are the next best instrument.
We had a good week of harvesting last week, but it has now been raining for three days. We had a flash drought in our area in August which has reduced bean yields quite a bit.
We need to watch supply and demand on corn quite carefully. Worldwide, we are coming into very tight supply and demand, which shows usage at a very high rate.
I think we are at a level right now where we should be looking at covering some of our energy needs for this spring. We’ve had a good run up and a sell off. This level should have good support, and it should be attractive, especially if we can get this corn market to bottom.
We will know the election results this week. Any drastic moves to the upside could be considered as a selling opportunity and sharp downward movements could be considered as a buying opportunity.
I think it is imperative that we keep current in this cattle market. We have seen in the past how making cattle too big can destroy a market and generally we here in the Corn Belt are the biggest offenders.
Good luck and good marketing.
This weekly report is for informational purposes only and is not to be construed as an offer to sell or a solicitation to buy the commodities listed herein.