Sort & Cull

It's been a rocky road for the commodity markets since the first of August as economic pressures have sent traders into panic mode. The futures complex hasn't been able to establish solid, reliable footing since.

From the start of the month of August, the spot October live cattle contract has fallen $5.42, the spot September feeder cattle contact has fallen $12.30, and the CME Feeder Cattle Index has dropped roughly $11.01 in the past two weeks. Which begs a plethora of questions: Is this a short-term bobble in the market or has the market seen the cycle peak for this term? Is this typical summertime pressure that the market will recover from later this fall when beef demand strengths again? Or are the external pressures of the economy beginning to weigh too heavily upon U.S. consumers? And while I'd like to tell you I have the answers to all those questions, I simply do not.

If you've been following my work with DTN for some time now you know that I'm a fundamentalist at heart. I love tangible reasons and market fundamentals. But in today's marketplace, we can't solely reply on market fundamentals to give us the whole scoop, unfortunately. Speculative day trading, technical patterns in the marketplace, and external pressures all play a substantial role in today's market, whether we like it or not.

Even though we must respect and give merit to the fact that technicals have a place in the cattle complex, I think we'd be foolish not to watch what the market fundamentals do during this time of question. Which is why it will be imperative for cattlemen to keep a close eye on what feeder cattle prices do this week at Northern Livestock Video Auction's Early Fall Preview where 50,000 head of cattle are cataloged to sell, and at Superior's Big Horn Classic Sale where 220,000 head of cattle are cataloged to sell.

I'm optimistic that demand will keep prices elevated through these two video auctions this week as there simply aren't as many feeder cattle to be had this year and feed prices are cheap. I personally am excited to see what bred-female prices do on these sales as they'll be the first test of the season and it's anyone's guess at this point what buyers are willing to pay. There's a lot to learn from this week's market -- stay active and engaged folks!

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

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