Call the Market

If there's one thing we can be certain of, it's that the market is never entirely certain of anything. When I first began tracking the markets, I was naive enough to believe that the cattle market primarily focused on cattle market things -- supply and demand, throughput, boxed beef prices, packer profitably, imports and exports, and so on.

However, as the world continues to change, the cattle market seems to be far more influenced by external factors than it was just five short years ago. And that leads me to today's topic -- the feeder cattle market and its trajectory.

There seem to be two different realities that the feeder cattle market is grappling with. First is its tremendous fundamental position. With the U.S. possessing the fewest beef cows it has had in the last 52 years, the market is seeing alarmingly fewer feeder cattle being offered. For the first time since the CME Feeder Cattle Index was developed in 1991, the index broke above $250.00 this past September. Feeder cattle demand has been incredible, and as the market looks to the fourth quarter of 2023 and into 2024, demand should continue to keep prices strong, as the U.S. cowherd hasn't begun to be rebuilt yet. And, if feedlots intend to play the game in 2024, they're going to need to be aggressive in procuring feeders as there simply aren't as many of them to sort through this year.

However, that reality, as true and somber as it is, is only one side of the market's current coin.

The other side -- or the other reality -- that the feeder cattle market is grappling with is that of external pressures. From political chaos to economic uncertainty -- and now the war outbreak in Israel -- it seems as if the feeder cattle market could sing its own song of, "lions, tigers and bears, oh my!"

The question that all cattlemen want answered is: Which side of the coin is going to land face up more times than not as we work our way through the remainder of 2023 and head into 2024?

I believe in the market's fundamentals and see the validity in them. Never before has the cattle market been in a position quite like this, and even though the chaos and noise of the world continue to build, the market's fundamentals remain the same. There will be days when the Fed announces interest rates are going to go up again or that another government shutdown is looming, and the market will react poorly, and that's when I want to encourage producers to remember that they have options.

Yes, there are times when producers simply have to load cattle and get some cash flow brought in, but in the scenarios when time is on their side, I encourage them to assess the market, assess all their options and not be emotionally persuaded. There is money to be had in this market, and even though the chaos of the world never seems to sleep, with perseverance and discipline, cattlemen can still triumph with fundamentals on their side.

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

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