– Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economic, University of Tennessee
The futures market reversed its course this week as the brakes were put on the declining market and market participants have stepped on the accelerator to push feeder cattle prices higher. Most contracts have witnessed price increases of $7 or greater since last Friday’s closing price. Though futures have turned on their heels and headed in the opposite direction. Cash prices for feeder cattle have not been as quick to respond.
On Tennessee auctions this week, calves and feeder cattle weighing 500 pounds and more were called steady to $2 higher compared to a week ago which is a welcome sign for most producers, but it still lacks the price strength that most would like to see prior to marketing. Alternatively, calves weighing less than 500 pounds were as much as $3 lower compared to the previous week.
Seasonally speaking however, the calf and feeder cattle markets appear to be on point with the seasonal trends. If seasonality takes complete control then lightweight calf prices will continue to slowly decline through late spring, summer, and into the fall while feeder cattle prices will slowly gain value through spring and summer before facing serious opposition in the fall. The fundamentals of the market support some price support as feedlots have accelerated marketings and seem to be pulling cattle forward to take advantage of the strong basis. The increased marketing rate has resulted in feedlots being much more current in the marketings which suggest they will be looking for cattle to restock the pens. Producers looking to market calves in the next several months should keep an eye on the price direction to improve marketing decisions.
On a little different subject, the slaughter cow market tends to peak in the Months of May and June. Producers with cows that failed to calve this spring or fall calving herds that identified open cows may benefit from marketing those cows in the near term. Most of those cows should be in fairly good condition and carrying good weight considering they have been on grass for several weeks. The marketing of calves is not the only source of income for cow-calf producers and sometimes it is beneficial to strike when the iron is hot.