The age old question in the cattle feeding market: What should I do? Producers looking at the past and what it may look like in the future to make the best decisions for their farms and operations is never an easy task. With the roller coaster ride of the cattle markets, cash and futures it leaves everyone a little gun shy at times. But, fear not because there are still ways to make your operations function-able and profitable. There are many tools and reports to watch and track to help you make the best marketing decisions for your operation. The main ones I like to watch are:
Cattle Future Boards (CME)
These give you an idea of where the market may be heading in the long term and gives you risk management options for locking cattle in on forward contracts with local packers. Contracting allows you to know your selling price and you can then try and feed for premiums on the contract to raise that price.
Five Area Market Reports
The five area is the western United States split into five regions and shows the average price of cattle sold live and carcasses basis. This tool really helps give you an understanding of what the cash market is doing as a whole on a weekly basis. The report tallies daily and the best time to watch it is the end of every week, as that’s when cattle trade happens the most. For producers selling always on the cash market, this is the best tool for you to watch to know where to price your cattle when talking to a packer or going to the sale barn.
Local Market Reports
This is the most common tool for this area and can give you a good indication how the local sale barns are doing. How is the market? Is it above or below the national average? Is there a better place to be marketing my cattle? These are all things to watch for when looking at local market reports. I always suggest using the average section in order to get the total average of choice cattle for that week. Then, gauge your cattle from there for different marketing values.
Looking at the local Lancaster county market as of 8/19/16, weekly average for high choice and prime cattle was holding at about the $118-$120 cwt on average. Now, that is still a big difference from board pricing at $113.57 cwt for the same day. According to analysis and market watchers, the claim of seeing mid 120’s cwt will be coming back for this coming fall and early winter, but we’ll have to wait and see if that actually happens.
Using these tools to watch the markets can lead you in the right direction for marketing your cattle in the most profitable way. From what I’ve been seeing in the market place, coming into this fall and winter, I believe producers need to be careful and make smart decisions. Know your costs to get that steer from starting weight to finish weight. Know your break even costs and use risk management tools for the next coming year. Other opportunities that really benefit your bottom line, like feed efficiency, are a good area to focus on in order to see if your cattle are gaining and using the resources you’re providing to the best of their ability. Feeders need to be bought at a level that you can make a profit on the top. Knowing those cost on what it’s going to take to get it to the end is key. With a market like we are seeing now making sure your system is a well-oiled machine and protected with risk management options is what I feel is the best route for the next coming year.
by Curtis McFadden, Northeast Feed, Sales Representative