The fall rush of feeder cattle appears to be in full swing (in Tennessee as September came to a close), and buyers are placing balling calves on the truck.
Calf and feeder cattle prices are generally on the decline during the fall flush of freshly weaned calves, but the market caught a breath after three weeks of price declines and made some significant gains.
Feeder cattle futures have also been climbing and are experiencing record highs as October futures have increased more than $4 the past week and January futures have increased more than $3 over the same time period.
A combination of factors including lower grain prices, positive expectations of winter forage, reduced feeder cattle supply, jump in live cattle futures prices, and increased demand from farmer feeders have ignited the contra-seasonal cash price improvement for calves and feeder cattle.
Farmer-feeders had little to no interest last year in purchasing cattle to place on feed, because they either had no corn to feed or they were selling corn at record high prices. However, this year with corn prices plunging and cattle prices soaring, many farmer-feeders have an incentive to forgo the cash corn market and market their grain through cattle.
The current cash market for calves is extremely appealing to sellers, but there is a good opportunity to increase net returns to the cattle herd by weaning, vaccinating and preconditioning those spring born calves and then marketing them next spring. This production and marketing method should be even more appealing for cow-calf producers with a lot of standing forage as forage can provide a relatively inexpensive cost of gain.
For stocker producers, the risk is much the same as in previous years. There will be a larger upfront cost as calf prices are strong for the fall time period, but prices at spring marketing are also expected to be strong.
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