Earlier this week, I was scrolling through my inbox and catching up on articles as the economy's higher inflation, recent jump in grain prices and potential railroad strikes have rocked the cattle market back on its heels. Not long after, my phone started to buzz.
Message No. 1: Hello, I like your market updates, are you available to chat?
Message No. 2: I'm starting to get nervous that I should have sold my calves a month ago when the market was hot.
Message No. 3: I may have gotten greedy and put too much faith in the hopes of a bullish market later this fall. I usually sell around Oct. 15, what should I do?
Whether it's from the face-to-face conversations I've had, Facebook posts I've come across or messages I've received, there seems to be one underlying theme haunting today's cattle market: Will the bullish move that was anticipated find its way back into this fall's market?
The messages listed above may seem a little overbearing, but when inflation is showing no signs of weakening anytime soon, and your dollar doesn't go nearly as far as it did even a year ago -- cattlemen have every right to be anxious about their bottom line and how they'll best sell calves this year, if they haven't done so already.
I was fortunate enough to have a market mentor chat with me after the packing plant fire in Holcomb, Kansas, in 2019, and every time the market seems to be panicking, his words still ring true in my mind. He said, "Cattlemen have a rotten tendency that, when times get tough, they stop looking at their cattle like assets and start looking at them like liabilities."
While today's market may have the bull-spreaders holding their breath, one can't argue with today's fundamentals and not believe that better times are ahead. First, and as basic of a principle as there is, we sit with the second fewest beef cows that the nation has had in the last 50 years. Second, even though packers have been passive buyers in the cash cattle market over the past three weeks, choice and prime grading data highlights that showlists are current and cattle are spending fewer days on feed as packers are needing to pull them ahead of schedule. Monday's choice/prime grading percentage for the nation fell to 78.73% -- carving out another new low for 2022 and remaining well below the market's five-year average. Lastly, even though it seems like old news at this point because it's been talked about so much this year, beef cow slaughter in 2022 hasn't eased up whatsoever. To date, the market has processed 2,642,000 head of beef cows, which is 13% more than a year ago and is 27% more than compared to the market's five-year average. To put things into perspective even more, in 2019 (when retrospectively beef cow slaughter was running aggressively), the market managed to process more than 70,000 head of beef cows on a weekly basis 19 times throughout the year. Thus far in 2022, on a weekly basis, the market has processed more than 70,000 head of beef cows 32 times over the span of 35 weeks. That's some pretty bullish news for cow-calf producers.
I'm not here to belittle the lump in the market's throat. If the railroad union workers do go on strike, the market's immediate response will be costly and devastating, and if it continues for any length of time, the cost and devastation will only compound by the minutes. For those of you who have yet to market your cattle, every single day they remain in your possession you're faced with two options -- sell today or don't. Regardless of what else shakes loose this week, your cattle are indeed assets. If the current market scenario doesn't yield prices that favor your position, cling to the market's fundamentals, remember that every storm does indeed pass, and that you sit in the driver's seat of your selling strategy. Given the recent developments with the railroad, it may take some time, but the bull-spreaders will indeed find their way back into the market. The big question is: How far into the third or fourth quarter will that be?
ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com
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