We knew the feeder cattle contracts were going to be in for a hard-pressed Monday given that the Cattle on Feed (COF) report surprisingly showed placements up 3% compared to a year ago. Add the additional pressure from the corn complex closing a whopping $0.29 to $0.32 higher and one can quickly see why feeders simply stood no chance to close higher on July 24.
At this point, I find the pressure of the corn complex to be more burdensome than last Friday's COF report. It's rare for a COF report to positively influence the cattle complex and, truthfully, a neutral-to-bearish reaction is almost always expected after the monthly report is unveiled. However, the price of corn could become problematic for feeders in the long term.
It's hard to put much faith into today's corn prices as harvest is still a way to go, and it's hard to accurately predict what the crop will amount to until the fields are chopped and the grain bins are filled. Nevertheless, until we are closer to harvest and have a better understanding of what exactly to expect from this year's grain crop, feeders -- and even the live cattle complex to some degree -- will be subject to some volatility.
Demand hasn't bobbled whatsoever in the countryside at sale barns or at video actions this summer. This week, Northern Livestock Video Auction is hosting its Summertime Classic and right at 160,000 head of cattle are cataloged to sell. Given how strong last week's feeder cattle market was, it's likely that buyers continue to support sales this week as they know supplies are small and will likely only become smaller the deeper into the second half of the year time goes.
So long as the corn complex doesn't pose much more of a threat, feeders will likely be able to shake the bearish tones of last Friday's COF report and cautiously keep an eye on corn prices while still being able to maintain their high price point.
Click here to read DTN's Cattle on Feed and Cattle Inventory comments from Friday, July 21: https://www.dtnpf.com/…
ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com
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