Sort & Cull

Spring Moisture Drives Feeder Cattle Contracts Higher

ShayLe Stewart
By  ShayLe Stewart , DTN Livestock Analyst
Snow accumulations in the North during the weekend have feeder cattle contracts trading higher. (ProphetX chart)

It's amazing how much the weather affects the markets. Sometimes we tend to think that just the grain contracts can be affected by weather changes, but it's clear in this week's market that the cattle contracts are also affected by weather.

Parts of Montana and Wyoming received record breaking snow accumulation during the weekend which has cow-calf producers breaking through snowbanks to keep their calves alive, but thankfully they can dream about the grass that's to come while doing so!

Since the start of March 27, the feeder cattle market has rallied and broke out of last week's doggish sideways trend as the market moves its contracts anywhere from $1 to $3 higher. It's especially interesting to note that it's still the deferred feeder cattle contracts that are seeing the most support. Feeder cattle supplies are thin right now, but come the second half of the year, supplies are only expected to become fewer, which will consequently drive prices higher and increase the competition for feeders. Throughout early 2023, I've been especially interested in tracking the spread between the May 2023 feeder cattle contract and the August 2023 contract. All throughout 2023 the price spread between those two contract months has varied anywhere between $10 to $25 -- which is a huge difference. As of March 27, the price spread currently is $15.

So long as the corn complex doesn't trade much higher, sales throughout the countryside stand an excellent chance to rally this week. The onset of moisture helps brighten everyone's morale and paints a promising outlook that grass should be plentiful, too.

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

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