The lightweight calf market tends to soften in late spring, but yearlings seem to be going along for the ride.
Andrew Griffith, Extension ag economist with the University of Tennessee, says yearlings typically see price support as summer nears.
“It would appear feeder cattle futures have done their frolicking at the top of the market and are now wallowing in their lows,” he writes in his weekly market report. “The constant question has to do with what caused feeder cattle futures to suddenly swallow $20 of their price since Easter.”
Griffith says the market may be over-analyzed.
“The current price on most feeder cattle futures contracts is only $8 to $12 lower than the range it traded in from late October to the middle of March,” he says.
“People actually making a living with cattle have continued trading on a flat market with little change in price the past seven months.”
Griffith says the market may be forgetting some data, including cow herd size as of Jan. 1 and the 2018 calf crop.
“These animals never disappeared from existence nor did they grow wings and fly to an island in the Caribbean,” he says. “However, the wild trading turns provided opportunities and disappointments to many cattle producers.
“The advice today is to sit tight, watch for another opportunity, and take action as an opportunity will surely present itself even if it is only for a moment.”
Fed cattle prices are still running slightly higher than year-ago numbers, Griffith says, despite three straight weeks of losses.
“The positive basis has been the motivating factor for most feedlot managers to push cattle out of the feedlot even though they would prefer to hold the line on cash traded cattle,” he says. “The current week’s cash trade is still resulting in a $6 positive basis, but the expectation is for this to be whittled away over the next month.
“It would appear the finished cattle market is now in a situation where things are going to get worse before they start to get better.”
Griffith says it is likely Choice beef prices have reached highs for 2019, and could possibly test the $200 mark.