Counter-Seasonal Opportunity

Jul 20, 2022

By Stephen R. Koontz

Events on the grains markets appear to be communicating the potential for counter-seasonal opportunities in feeder cattle markets. There is the potential for price strength into the fall.

Grain markets spent the first five months of this year rallying to impressive highs: $7.50/bu harvest corn, $15/bu harvest soybeans, and $12-$13/bu harvest wheat. Concerns about current supplies, strong international and/or domestic demand, political concerns over war in eastern Europe, the pandemic recovery, and potential for drought were all contributors. However, during the two weeks prior to the June 30 USDA NASS Acreage report the harvest corn market sold off $0.80/bu and beans lost $1/bu. The selling has continued after the report. And it is my assessment that the report was not surprising – the exception would be for soybeans. It was expected that the report would show 89.8 million acres of corn were planted. The actual report numbers were 89.921 million acres. Hardly a surprise. Pre-report expectations for soybeans was that 90.6 million acres would be planted and the report delivered 88.325 million acres. And the low end of the expectations was 89.2 million acres. That is outside of the expectation range and would be classified a surprise. Details on where bean acres are short are interesting, but in the end this is hardly a bearish report. Yet both markets have continued the selloff. There have been a few days of corrections during the move lower but harvest corn is down in total about $1.50/bu and beans about $2.00/bu. This change is a substantial and fundamental change in the outlook for animal feeding costs. This will without a doubt create opportunities for some improved prices of feeder cattle and calves.

But we will have to wait for the substantive resumption of trading in many cash feeder cattle markets following the holiday week. Markets and regions in the central U.S. that did trade were modestly higher. Cash markets for corn and other feedstuffs, however, have held their strength. Regional cash corn markets in Kansas, Colorado, and Texas are routinely $1.30 to $2.30/bu over the September contract price. The futures markets for grains are revealing a changing supply and demand picture that should be much more favorable for cattle producers. However, the cash markets have yet to follow.

Source : osu.edu

Video: Evolution of Beef Cattle Farming

The Clear Conversations podcast took to the road for a special episode recorded in Nashville during CattleCon, bringing listeners straight into the heart of the cattle industry. Host Tracy Sellers welcomed rancher Steve Wooten of Beatty Canyon Ranch in Colorado for a wide-ranging discussion that blended family history and sustainability, particularly as it relates to the future of beef production.

Sustainability emerged as a central theme of the conversation, a word that Wooten acknowledges can mean very different things depending on who you ask. For him, sustainability starts with the soil. Healthy soil produces healthy grass, which supports efficient cattle capable of producing year after year with minimal external inputs. It’s an approach that equally considers vegetation, animal efficiency, and long-term profitability.

That philosophy aligned naturally with Wooten’s involvement in the U.S. Roundtable for Sustainable Beef, where he served as a representative for the Colorado Cattlemen’s Association. The roundtable brings together the entire beef supply chain—from producers to retailers—along with universities, NGOs, and allied industries. Its goal is not regulation, Wooten emphasized, but collaboration, shared learning, and continuous improvement.