– James Mitchell, Livestock Marketing Specialist, University of Arkansas
As I sat down to write CMN today, I struggled to think of a topic that wasn’t related to feeding costs, drought, or fed cattle supplies. Kenny, Josh, and I have taken turns taking a deep dive into each of these topics. Because of how important each of these issues will continue to be for cattle markets, I thought I would briefly summarize each of them. Throughout, I will reference past CMN articles for readers who want a more detailed explanation of feed costs, drought, and feedlot inventory.
A few weeks ago, Kenny did an excellent job connecting feed costs to feeder cattle markets. Kenny described how feeder cattle markets are driven by the expected future value of fed cattle and the costs of producing those fed cattle. If we think of feed and feeder cattle as inputs for fed cattle production, then an increase in feeding costs will impact feedlot demand for feeder cattle. Corn markets provide a good reference for feed costs. As of this writing, the nearby corn contract is trading at $6.48/bu. This gives a good indication of what it might currently cost to feed cattle. Currently, the December corn futures contract is trading at $5.37/bu. The December harvest contract is important to monitor as it coincides with fall cattle markets when a large share of calves are sold. With 67% of the corn crop planted, conditions this growing season will be important to monitor.
Drought conditions do not appear to be improving. Last Continue reading