Sort & Cull
Freezing Weather, Rising Corn Prices and Cattle to Sell
Last week's cash cattle market developed just in the nick of time before the country welcomed Old Man Winter. You don't have to be in the cattle business long to know the hardship winter storms can bring: annoying tractors that won't start, water freezing up, and calves that get to enter this world to quickly be shipped to their new residence in the Hot-Box Hotel.
But as odd as it may seem, a good winter storm can bring the cattle market a gust of support. Feedlots typically like to weather the storm and don't worry about trading cattle in the midst of high wind gusts and snow blowing sideways; however, this week's trade could easily fall either way.
Last week's negotiated cash cattle trade totaled 102,508 head with 73% of those cattle committed for delivery in the next two weeks. A movement of 102,508 head accompanied with a stronger cash cattle market leads us to one stark reality -- packers need cattle and they want them NOW. With boxed beef demand being as high as it is, packers are willing to run long shifts and are reaping the benefits of a strong market. Even though they don't like paying more for the cattle, packers know the cash market is only going to get stronger in the weeks to come. All these factors help boost the feedlots' position and encourage higher trade again this week.
But there are some factors that we must consider when evaluating this week's cash cattle market and what could undermine the bearish market. If feedlots are going to get anxious about how full their bunks are and about the increasing price of corn, it would be a perfect week to sell all their heavier cattle. Last week's actual slaughter data shared that, for the week ended Jan. 23, steers averaged 926 pounds (up 1 pound from the previous week) and heifers averaged 851 pounds (up 1 pound from the previous week). Thankfully, the market has been strong enough to absorb a vigorous kill schedule and heavy carcass weights but, moving forward, feedlots will want to rid themselves of this position and be able to liquidate cattle earlier in their feeding cycle.
Regardless if feedlots move the cash cattle market higher, or if they clean their lots of heavy cattle, this week holds an opportunity for feedlots to better their position. The 10-day forecast is gruesome to look at with snow accumulation still likely and temperatures trending in the single digits for a lot of cattlemen. But hang in there, friends. We need this moisture to help lead to affordable hay prices next year and to give us something to kick our cows out on next spring.
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ShayLe Stewart can be reached at shayLe.firstname.lastname@example.org
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