By Kenny Burdine
From my perspective, cow-calf operators have been as annoyed over the past couple of years as I’ve ever seen them. A number of commodity markets improved an ideal deal throughout 2021, however the enchancment in calf costs was fairly minimal. In actuality, the cow-calf sector has been handed 4-5 consecutive difficult years. Fundamentals seemed to be organising for worth enchancment two years in the past, however between COVID in 2020 and sharply greater grain costs in 2021, calf markets have struggled to realize any traction in any respect. I stay bullish on the 2022 market and assume we are going to see our greatest spring calf market since 2016, however unknowns at all times exist. So, I wished to focus this week’s dialogue on three key questions that I believe will drive this 12 months’s calf market.
How excessive will fed cattle costs go?
Fed cattle costs sometimes make their highs within the spring of the 12 months and transfer downward by way of summer time and fall. Final 12 months, slaughter cattle costs improved by about $17 per cwt from early October to early December, however did pull again a bit as we moved by way of December. As I write this on the morning of January 10th, April CME© Reside Cattle futures are on the board above $140 and the break to the June contract is comparatively small. Expectations of fed cattle costs drove heavy feeder values final fall and the costs ranges which can be really reached this spring will set the tone for a lot of 2022.
What can we anticipate from feed costs?
Focus within the grain markets has already turned to doubtless 2022 manufacturing ranges. The dimensions of the South American crop is being mentioned as we converse and the following couple months might be essential as US farmers make planting selections for the present 12 months. There was a number of speak recently about fertilizer costs, however new crop corn is on the board within the mid-$5’s. Planting selections are the start line for estimating the dimensions of the following crop. Along with the standard climate / yield affect on worth, will probably be very attention-grabbing to see if export ranges proceed on the brisk tempo that has been seen lately.
How way more culling will we see of the cowherd?
There isn’t a query that this beef cow herd is smaller now than it was one 12 months in the past. The one query is, how a lot smaller is it? The West and the Northern Plains have been coping with drought most all of final 12 months, whereas situations within the Southern Plains turned drier within the fourth quarter. Dry situations have been positively an element behind the cow slaughter ranges of 2021, however disappointing calf markets have been additionally at play. It’s tough to trace cow numbers by area all year long, however cows seemed to be transferring in areas that weren’t coping with drought. I anticipate one other lower in beef cow numbers throughout 2022, and if dry situations persist, that lower will get even bigger.
Josh ended final week’s article by mentioning that the primary of the 12 months is an efficient time to think about threat administration methods. There isn’t a solution to know with certainty what feeder cattle worth ranges might be this summer time and fall. However as I write this text, August by way of November feeder cattle futures are all buying and selling above $180 per cwt. It has been a while for the reason that market has supplied that kind of pricing alternative.
Supply : osu.edu