Sort & Cull

Politics and Psychology: The Two P's the Market Wishes It Could Avoid

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
Both the feeder cattle market and fat cattle market wished to have a strong week last week, but with the distraction of external factors, the market was left to trade steady to somewhat weaker. (DTN/Progressive Farmer file photo by Jim Patrico)

As much as we'd like to forget about last week and the chaos that stemmed from the sheer havoc that broke out in Washington, D.C., and from the tensions surrounding Georgia's U.S. Senate seat runoff election, we cannot underestimate the effects of these events on the cattle market. And, sadly, last week's cattle market was struck by the two P's the market wishes it could avoid at all costs: politics and psychology.

This came at a disappointing time, as the market was hoping for a robust rally into the new year, but also at an inopportune time because the market's fundamentals were starting to show some bullishness. After nearly two week of extremely limited feeder cattle sales because of Christmas and New Year's holidays, order buyers, feedlots and farmer feeders were all gearing up to buy at the first sales of the year.

But with the onset of high corn prices and the unsettling disruption throughout our nation's government, sales were hit or miss last week for calves and feeders. Lightweight calves that will make grass cattle next spring were met with strong demand, while the heavier-weight feeders that have no option but to go to the feedlot sold weaker last week.

The fat cattle market had strong intentions heading into the week, but as boxed beef prices waned and the nation's chaos became headlines, feedlots' ability to move the cash cattle market $2 to $3 higher became slim. Last week, the Southern Plains sold cattle for $110 to $112, which was considered steady with a week ago, and the Northern Plains sold dressed cattle for $174 to $180, which was steady to $1 stronger.

As cattlemen, traders and analysts alike, we tend to want to look at the cattle market, dismiss outside factors and instead focus solely on cattle. But, in all reality, outside factors can have some of the biggest impacts on our marketplace. Heading into this week's trade, monitoring the corn market and finding a true gauge on the feeder cattle market will be priority matters. The fat cattle market will continue to be met with pressure from packers as they see weakening boxed beef prices. But, with the right marketing strategy, achieving steady to $1 higher prices is attainable.


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