Call the Market

If there's one thing that's been constant about this year's market, it's that prices have been strong, and the market isn't concerned with obeying seasonality. It's normal to see feeder cattle runs start to pick up the last two weeks of September before the big runs kick off in October, but 2023 spring-born calves are already making their way to town, which has cattlemen, analysts and buyers alike asking if the fall feeder cattle rally is underway already.

Whether you note the increase in feeder cattle receipts at sales, watch the CME Feeder Cattle Index creep higher and higher or watch the futures complex continue to climb to new highs, the market's answer is clear -- the floodgate to the fall feeder cattle run has been cracked and it's anyone's guess when the door will swing wide open.

There are a couple of market highlights that I want to make you aware of.

First, the CME Feeder Cattle Index finally broke above $250. On Monday, Sept. 11, the index for Sept. 8 (because the index runs one market day delayed) closed at $250.43. That's the first time since the CME Feeder Cattle Index was established in 1991 that the index has broken above $250.

Secondly, you're probably wondering why the market is seeing the fall rally get underway earlier this year given that prices are only projected to get stronger as the fall goes on. And between the for-longed drought in the South limiting feed in some regions to the strong market demanding the attention of producers, some operations have elected to capitalize on the prices being offered today as opposed to taking a risk and hoping the market's strength holds true.

Thirdly, I have noted a considerable price spread between weaned/vaccinated calves and unweaned/unvaccinated calves this fall. Given the price point that buyers must pay to get to these calves/feeders, they simply aren't willing to take as much risk on the unweaned/unvaccinated calves as those cattle will take longer to get on feed, require more doctoring and will likely have a greater death loss.

So even though it may seem early to be talking about the fall feeder cattle run, the market is clearly telling us that it's here. Remain optimistic that the market has only scratched the surface of what it's going to accomplish in this bull run and that we could see prices this fall that have never dared to be dreamt of before. Supply and demand are beautiful market mechanisms, and our supplies are short and demand is high!

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

(c) Copyright 2023 DTN, LLC. All rights reserved.