Call the Market

Over the last three days, we've been blessed with afternoon showers that give me hope this year's summer is going to be somewhat better than last year. I know that not all parts of the U.S. have received moisture lately, and there are parts of the South that are in dire need, but there are also regions in the West where their drought-stricken pain is being slowly relieved by timely showers.

As I was taking my afternoon walk to the mailbox, I didn't even mind that the rain was drenching my sweater -- it seemed like gold was falling from the sky! I say gold instead of money because we too frivolously spend our hard-earned dollars, but gold is always cherished and well preserved.

While I looked out over our pairs, grazing on the hills adjacent to the irrigated bottoms, I couldn't help but wonder how these timely rains would affect feeder cattle prices.

I know it's bewildering, but the year's early summer feeder calf specials are just weeks away. That's when the market will get its first real test of what buyers and sellers are willing to come to terms on to establish a market price for this year's calf crop.

Regardless of where you look, all the signs, signals and cues are indicating that this year's feeder cattle market is going to be one heck of a force to reckon with. I continue to be amazed with the market's tremendous beef demand and the tirelessness of feeder cattle buyers in the countryside.

Beef demand is a core factor that will need to remain strong for this year's cattle complex to remain elevated. Yes, just last week we saw a regression in weekly boxed beef prices, which is seasonally expected around Memorial Day, but the recent price decline had a positive selling effect as retailers began stocking up ahead of the season's prime grilling months.

Even though new-crop corn prices have seen some rallying days early this week, the CME Feeder Cattle Index clearly shows feeder cattle buyers aren't weakening. The CME Feeder Cattle Index for May 22 closed $2.06 higher at $206.76 -- the highest the index has traded since August 2015.

The market is never free and clear of problematic stumbling blocks, but I remain optimistic for this year's feeder cattle market. Superior's first summertime sale is the Corn Belt Classic, which will broadcast on June 7; Western Video Market will be offering a sale on June 8; and Northern Livestock Video Auction's first big summertime sale is their Early Summer Special, which will be auctioned and broadcasted on June 22.

All those sales will be worth tuning into as their markets will establish a tone for contracting calves and will begin to set a precedent for what feeder cattle prices could be in 2023. No one knows when the market's yearly top for feeder cattle prices will be rung, but I'm under the impression that, if beef demand remains strong and if drought pressures can be eased (even slightly), feeder cattle prices during the second half of the year could be a surprise as our industry is incredibly short on calves.

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

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