Call the Market

Remember in years past when there were only one or two things we were really monitoring for the cattle market? Wouldn't it be pleasant to only worry about beef exports or to only anxiously watch slaughter data? Unfortunately, in today's current cattle market, there's not a subject that doesn't need tracking.

Much like the rest of you, our lives are centered, rooted and truly revolve around the cattle industry. From running registered Sim-Angus cows, to hosting our annual Big Country Genetics Bull Sale and selling feeders in the fall, a healthy market is what we plead for. Thankfully, my sweet husband and I share the same uncontrollable passion for this industry, but given our different mindsets and tendencies, we go rounds.

Sometimes those rounds are merely dancing in the living room, but, more often than not, those rounds include heated conversations. Nobody ever told me before we got married that bulls and bears have a hard time living under the same roof. Jimmy is the most optimistic bull you've ever met while I tend to lean towards the bearish facet of life. And so, as you can imagine, our day-to-day lives can be quite colorful.

"Hey honey, have you registered those bull calves yet?" Jimmy gingerly asks, knowing that registering cattle is one of my least favorite ranch jobs. "No, they aren't going to be worth two goats next fall so we might as well save the fee, hassle and headache," I sarcastically reply, knowing all too well that after dinner I'll be propped at my desk, his calving notes to my left and a glass of red merlot to my right.

"I think I found a good feed truck! It's just the right size, the tires have some decent tread and it's not too nice to where I'd feel bad about pumping it around the cows," Jimmy eagerly explains. While I, the brutally honest bear who is not so coy about his wonderful feed truck, quickly go to look at what he has up on the computer and say, "Jimmy, this may be a metal frame with four decent tires, but you forgot to notice the description on the bottom of the picture that reads, "For free, you haul, as reliable as the Flintstones' car -- selling as is."

Back to the markets: Where are things headed? What upside potential is there and how much worse can it get? I understand that you can wear whatever hat you choose, but there's always the potential for a different outcome. Bulls can be bit by bears and bears can be outworked by bulls. Instead of choosing one outlook, I find the most clarity being completely factual and rely on the hard facts to lead me to new questions and hopefully stronger conclusions.

BULLISH FACTORS

It's been a tough year! Folks are ready to gather around their friends, squeeze their loved ones and laugh over rich conversation. COVID-19 has become a much greater beast than most of us assumed it would, but there's no denying that everyone wants life to get back to some essence of normal. Thankfully, the early summer feeder cattle specials drummed up optimism. Farmers and ranchers gathered around to tune into both Superior's and Northern's sales and were rocked back on their heels by how strong the calves sold for, calling the sales anywhere from $6.00 to $12.00 stronger. Producers, for the first time in a long time, went home with something positive to share.

BEARISH FACTORS

If there was any month that I wish we could fast-forward through or skip, it would be July. Since the live cattle contract doesn't trade the month of July, it's going to be nearly two months until the August contract expires on Aug. 31, at which point the cash and futures markets should converge. Until then, the industry will be subject to great volatility and could see wide price swings. Last week's Southern cash cattle trade ranged from $93 to $95 and Northern dressed cattle sold for $152 to $155. Seasonally, July is the time when there's the most readily available fat cattle to harvest, and that's not considering this year's backlog of cattle that also need slaughtered.

Some of the specific factors to look at include:

The "hole" this fall and slaughter: Based on seeing lower placements for March and April on the Cattle on Feed reports, there was some hope that this fall there may be a hole in the marketplace that could yield some higher prices for feeders. But with thousands, if not a million, cattle backed up and not able to be processed, folks that were feeding for that time frame will still be competing with fats weighing upwards of 1,400-1,500 pounds. And though our slaughter speeds have progressed, we have yet to exceed over year-ago levels.

Boxed beef demand and pork supplies: Sadly, just like the cattle market, the hog sector is saturated with readily available hogs that were supposed to be killed more than two months ago. With three of the four summer meat holidays over with (Memorial Day, Father's Day and Independence Day), the marketplace is praying that consumer demand strips the meats counters clean this summer so that product can continue to be moved.

CONCLUSION

This last episode of Yellowstone was one for the books! John Dutton, while spending some time in the mountains with his grandson, Tate, says, "Ranching is a terrible business, grandson ... we can't control the price of beef or hay, or the diesel it takes to take the cattle to auction, or the hay out to the cattle. There are federal regulations, there are state regulations, there are county regulations, and there are people in the city suing us, complaining over the way we raise the food they eat. There's blizzards and droughts, then half the herd tries to kill itself in the river, while the other half is looking for a hole in the fence, just so they can go stand in the middle of the highway and get hit by a car -- or they go and wander into the forest to go and get eaten by a wolf or a grizzly." Then Tate, with his wise 8-year-old wisdom, looks at his grandpa and asks, "Well, if ranching is so hard, how come we do it?" And John, without skipping a beat, says, "Because it's one hell of a life, Tate -- one hell of a life."

Whether you fancy yourself a bull or a bear, triumphing this year's obstacles is going to take determination, grit and effort. Thinking outside the box and being willing to do what the unwilling won't do could be the key to persevering.

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

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