While last week's drop in corn price provided an opportunity to lock in feed needs, that volatility makes planning difficult.
Weaker grain and stronger fed prices mean some classes of cattle show profit potential that can be locked in now.
The old rule of thumb that feeder prices trade inversely to corn price does not necessarily hold true in today’s markets.
Global macroeconomic factors weigh heavily on cattle feeders’ bullishness, while the short cattle supply is not forgotten by bears.
Cattle feeding margins continue to deteriorate in the near term.
But projected breakevens for live cattle do not appear favorable.
Hedging in a break-even remains elusive, so cattle feeders are using strategies to leave upside potential open.
Last week's corn price decline helped bring down break-evens for cattle feeders, but feeder prices remain strong.
The cattle feeder's cost of gain will increase approximately $0.04/lb from corn basis alone.
While the decline catches many off guard, a continued rally in corn prices keeps feeder breakevens in the red.
Price volatility in the corn, fed and feeder cattle markets can provide opportunity to manage risk exposure.
Price activity was beneficial for those in the feeder cattle market, but for cattle feeders the dilemma of placing cattle below breakeven continues.
Live cattle prices and input costs are starting to take their toll on feeder cattle.
But drought conditions in some regions are dampening demand for stocker weight cattle.
Live cattle prices are not keeping pace with input costs and until that changes, the opportunities to lock in profits become less.
Until weakness in the live cattle trade or boxed beef price is apparent, the healthy feeder market should continue.
No improvement for breakevens on cattle entering the feedyard last week.
High corn and ration prices are forcing cattle feeders to be extremely selective in their purchases.
Breakeven projections show cattle feeders are only able to lock in negative margins right now.
Improving weather conditions allowed sizable feeder cattle movement to resume.
Breakeven estimates did not change dramatically from previous estimates as weather remains a problem for early February placements.
The margin is still negative for cattle being placed on feed.
Cattle feeders are beginning to show less appetite for purchasing feeder cattle at current prices.
See where projected breakevens fall for recently purchased feeder cattle .
But hedging breakevens in fat cattle getting difficult given the current price of feeders and grain.
Live cattle traded $3.50/cwt higher this week while beef exports remain strong and continue to support a bullish cattle market.
