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Price declines present marketing opportunity

Price declines present marketing opportunity

Winter cattle

Cow-calf producers should find plenty of marketing opportunities in 2021.

Andrew Griffith, Extension ag economist at the University of Tennessee, says price declines present opportunity, and there are still plenty of people who are optimistic about cattle markets this year.

“Despite corn prices moving higher and live cattle prices stagnating, there is still optimism in the calf and feeder cattle market,” Griffith says. “Thus, any producer who is bullish about the cattle market may view buying calves or feeder cattle today as a prime opportunity.”

Griffith says there is reason for optimism.

“There is no one who can perfectly predict the market all of the time, so today’s purchase of cattle should be based on what the market is offering today and not the possibility that it will improve,” he says. “As of right now, there appears to be more pressure on the cattle market than information to support higher prices, but odder things have happened. Prices in 2021 are expected to exceed prices in 2020 for most classes of cattle.”

The new year usually begins with optimism for cattle markets, although feeder cattle markets have struggled to gain momentum.

Marketings were a mixed bag depending on the auction,” Griffith says in his weekly market outlook. “Some of the auctions (in Tennessee) had a large run of cattle this week while other auctions had a lighter run than is typical for the respective market.

“Regardless of the physical marketings, most years start with optimism, but that has not been reflected in the feeder cattle futures market the first week of the year.”

Feeder cattle prices have taken a step back since the Christmas holiday.

“In actuality, feeder cattle futures began to slip following the Christmas holiday and that slide has continued into the first week of 2021,” Griffith says.

“January feeder cattle futures prices have declined about $5 per hundredweight since Christmas with most of the other contract months following its lead. This decline has definitely put a damper on local cattle prices this week.”

The timing of the downward action for feeder cattle markets has impacted producers looking to market calves after the first of the year.

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

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