Cattle feeding

The USDA released its cattle inventory and Cattle on Feed reports last week, and early results indicate the market views both reports as bearish.

Feeder cattle prices have been making gains, and University of Tennessee ag economist Andrew Griffith says that should be beneficial for all types of cattle producers.

“Live cattle prices are headed in a positive direction as far as cattle feeders are concerned,” he says. “This positive price movement also makes other cattle producers happy as some of the value will work all the way back to cow-calf producers at some point.”

There is some reason for optimism for the remainder of the year.

“There is a good possibility that some portion of the finished cattle will trade as high as $120 before the end of the year if the current trend holds, which will further support prices within the cattle complex,” Griffith says.

“The support for finished cattle prices may be stemming from the thought that there are not as many cattle out in the country as was first thought,” Griffith says. “If this is truly the case then finished cattle prices will be well supported in the spring with a target price exceeding $130.”

It has been a tough year for cattle producers, and Griffith says steer prices have been running well below their 2018 numbers. But he says there should be improvement in 2020.

“Despite the extremely low prices of 2019, there is one bright side to this information,” he says. “Cattle prices are likely to be higher in 2020 than in 2019. Maybe this thought is not as positive as most would like to hear because it will not take much effort to experience higher prices next year. The simple truth is that most producers would gladly accept 2018 prices again in 2020 compared to the rough year that has been navigated in 2019.”

Griffith says it would likely be worthwhile for producers to hang onto calves until mid-January and take advantage of likely higher prices.

“For producers who have not marketed their spring-born calf crop, continue holding those calves until the first of the year,” he says. “There is a good chance the price increase from today until the middle of January will exceed any negative tax implications the situation may present.”

Ben Herrold is Missouri field editor, writing for Missouri Farmer Today, Iowa Farmer Today and Illinois Farmer Today.