As the market trailed through December, we were all ready to soak up the holiday festivities and enjoy a day or two of Christmas bliss, but now that we've made it to the new year, the market is equally as anxious to get back to a normal pace and see what 2022 has to offer.
The market builds up annual angst about what the new calendar year will bring. Will there be prosperity and growth, rain that fills stock reservoirs and heightened demand for calves in the fall, or will it be a year of little rain, dismal prices and tough conversations at the bank? While the market can change quicker than the direction of the wind, the cattle market is eager to set a bullish, aggressive pace in the first weeks of 2022.
Last week, the cash cattle market jumped anywhere from $3 to $5 higher as packers desperately needed to get cattle committed for this week. With boxed beef prices on the mend, choice cuts averaged $265.03 last week, up $2.89 from the previous week, and select cuts averaged $256.65, up $5.56 from the week before. Packers have been willing to chase the cash cattle market in order to secure the cattle needed to run vigorous chain speeds.
This week I'm eager to see how well feeder cattle prices perform. Late last week, there were some feeder cattle sales and buyers didn't hesitate to jump into the market. For example, in Mitchell, South Dakota, there were 6,736 head that sold last week; compared to the last sale before Christmas, feeder steers weighing 600 to 900 pounds traded mostly $3 to $5 higher, with instances of even $8 higher. Steers weighing 1,050 to 1,100 pounds traded $7 stronger. Heifers weighing between 550 to 950 pounds traded mostly $3 to $4 higher, and even $6 higher at times.
The last time that the market really got a good test on feeder cattle was the week before Christmas, so amid the excellent rally that the live cattle market is striding out with, feeder cattle prices are expected to heat up so long as the corn market doesn't jump above $6 per bushel.
Omicron concerns in packing plants, $6-per-bushel corn and the worry of China deciding to stop buying U.S. beef are all some potential factors that I could see derailing the cattle market's ability to continue its rally into first quarter of 2022 and beyond.
After having gone through the woes of 2020, packing plants are more prepared now than they were before to deal with COVID-19 limitations, but with most plants still depending on a present labor work force for day-to-day operations, the risk still presents some concern.
Second, if $6 corn becomes a reality, feeders will be forced to take a painstaking look at their break-evens.
Third, in 2021, China was one of the most aggressive buyers of U.S. beef -- if for whatever reason they would significantly lessen their imports, then our export market would suffer.
ShayLe Stewart can be reached at email@example.com
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