One of the most frustrating things for cattlemen is that the cattle market isn't free from external pressures. While we'd like to think that only cattle- and beef-related market factors affect the cattle complex, both the live cattle and feeder cattle contracts are subject to nonrelated pressures and restraints just like the other commodity markets.
Have you taken some time to look at March 17's Cattle on Feed Report? After a week of nothing but mere doomsday energy throughout both the live cattle and feeder cattle contracts, I was relieved to see the COF report as supportive as it was. It's likely that traders find the report neutral to somewhat supportive as pre-report estimates were nearly spot on. But what the report does continue to highlight is that fundamentally, the cattle complex hasn't been this strong since 2014-15.
Early Monday morning both the live cattle and feeder cattle contracts were trading higher, but as the day progressed both markets fell short of closing higher as traders' fears continue to fester about the banking crisis. I hope that after selling cattle for $1 cheaper on March 15 that feedlots will better market their cattle and potentially be willing to wait until Thursday or Friday of this week to get steady to $1 or $2 higher in the cash sector. With boxed beef prices seeing ample support early this week, hopefully feedlots will be emboldened to push the market higher despite what the futures complex decided to do.
Regardless of what the futures complex decides to do with the COF report, we know where the market's fundamentals sit; when it comes to buying and selling cattle, these fundamentals remain relevant. Throughout the nation, we're consistently seeing both heifer calves and feeders sell at less of a discount to steers as buyers can market them in more than one capacity. Whether buyers choose to simply put them on feed and market them as fat cattle or decide to sell them as a replacement female option, people throughout the industry are keenly aware just how small our beef cow herd is.
It can be frustrating to see the futures complex undergo a wave of external pressure but continue to monitor the market's fundamentals. Eventually these pressures will pass.
ShayLe Stewart can be reached at firstname.lastname@example.org
(c) Copyright 2023 DTN, LLC. All rights reserved.