Sort & Cull

Cattlemen, Don't Get Stuck Playing Defense

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
To be frank, there's simply too much to lose if one sits back and lets the market flounder to whatever bottom it will eventually cascade to. (DTN photo by ShayLe Stewart)

As the world spins chaotically and as the markets become solely fixated on the war in Ukraine, I beg cattlemen to take an offensive role in today's cattle market.

To be frank, there's simply too much to lose if one sits back and lets the market flounder to whatever bottom it will eventually cascade to. Feedlots desperately need the spring cash cattle market to rally to its highest potential; and believe me when I say the springboard for that sought-after price is being established now. Any day now boxed beef prices should bottom and supportive consumer interest will again send lucrative dollars into the hands of packers. Feedlots, knowing how sparse market-ready supplies of cash cattle are, have a bleak window of opportunity to demand that cash prices jump.

Last week's negotiated cash cattle trade was disappointing. Sure, prices rallied, but volumes were thin and the percentage of cattle sold with time is growing each week. Last week, Southern live cattle sold for $138 to $142 ($2.00 higher than the week before) and Northern dressed cattle sold for $224 to $229, mostly at $226 ($2.00 higher than the last week). But the vast majority of those cattle are committed for delivery during the week of March 7. Monday's official reports shared that last week's negotiated cash cattle trade only totaled 68,349 head. Of that, 66% (45,392 head) were committed for nearby delivery, while the remaining 34% (22,957 head) were committed for deferred delivery.

It may seem tempting to think, as the war in Ukraine unfolds, the dynamics in the cattle market could change. But I ask you: Should they really change? Have the market's fundamentals changed?

Demand is still strong domestically, exports won't likely see much change and the beef cows are still being processed at record-breaking speeds. You could point to the grain complex and argue that its surge in prices weakens the live cattle market. But, given the point in time in which live cattle are marketed, I argue that the surge in grain prices affects feeder cattle more than live cattle.

Nevertheless, cattle are assets and the purpose of an asset is to increase an individual's or company's value, or benefit the individual's or company's operation.

Cattlemen have become accustomed to being price takers, but to achieve thresholds and price points that serve them, they must take on an offensive role in the market and demand the prices they seek. To make this business work, you have to play offensive, because if you get stuck playing defensive, you're always late and always behind.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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