Market Highlights: Hard to improve on current cattle market situation

The calf and feeder cattle markets have been exceptionally strong through the first five and a half months of the year, but softness in the calf market was present this week based on Tennessee weekly auction market averages. The softer prices for freshly weaned calves should not be concerning for producers as prices have strengthened over a two month period that generally results in softer prices.

Prices will likely continue to soften through the fall months as most stocker producers already have pastures stocked for summer grazing resulting in a declining quantity demanded for these calves. There will be producers who continue to purchase a few animals along the way especially if they are using feed sources other than pasture, but producers using pasture as the primary feed source are generally cautious during summer months as drought conditions are only two weeks away at any given time. The fall market for freshly weaned calves will continue to be softer as the quantity of calves supplied seasonally increases. The decline in prices from summer through fall will largely hinge on weather conditions as cattle numbers are not expected to put much pressure on calf prices.

The yearling cattle market appears to be favorable through the summer and likely through much of the fall. Demand by feedlots for yearling cattle is very strong. Much of the strength in the market is due to the large profits that have been accumulating the past several months.

Cattle feeders have been pushing cattle out of pens at a rapid pace due to strong profit margins. The rapid pace has resulted in lower cattle weights at harvest and a strong demand to refill pen space. Harvesting the cattle at lighter weights has resulted in some cattle being pulled off feed a little “green,” but cattle feeders have little concern as profits remain strong. Feedlots are current in cattle marketings which provides leverage over packers, but as packers continue to pull cattle forward, those feedlots will continue to pull cattle off of farms resulting in a strong feeder cattle market.

Source: Drovers