You might be forgiven for thinking that every fall is the same when it comes to cattle leaving the summer range and heading off to the auction ring. Every fall is different and every fall farmers study the markets to see how they can best react to what they see coming up.
Anne Wasko, market analyst with Gateway Livestock Exchange, joins Shaun Haney to decipher the numbers and read the tea leaves in this week’s Beef Market Update.
The first thing to note is that there are a lot of animals on feed. Wasko says “The expectations for the U.S. report,… on feed numbers to be up about five percent, placements up between six and seven percent and marketings … also up about five percent.”
The price of feed has been a part of the buildup in the cattle herd, but Wasko says it’s more than that. “Certainly we’ve seen over the last number of years profitability in most of the protein sectors and so that’s led to expansion.”
There is a lot of pork in the world though, and if pork becomes bigger chip in the ongoing trade battles, it could have a cascading affect on prices. Wasko warns, “Of course the story right now is certainly pork — pork in Mexico. We talk a lot about pork in China but the story from a price perspective is really the tariffs with Mexico. When you have trade on top of demand, that’s where the questions come into play as to how much pressure do we really need to get into, especially if there are any hiccups along the way.”
Cattle producers should keep a couple things in mind. Prices often weaken further into the calf run and buyers base what they are willing to spend on deferred contracts. Wasko cautions, “As we go forward I don’t think producers should ignore that seasonally (lower prices are) what tends to happen, and then that added risk on top of it now, is that trade concern and what that might do to some of the deferred futures out into 2019.”
From August 11: Beef Market Update: Anticipating an early fall run