Can Cattle Futures Find a Floor?
Following two days of falling cattle futures prices, Joe Vaclavik, president of Standard Grain, is calling the market moves a knee-jerk reaction to the latest Cattle on Feed report from the USDA.
"It was generally considered to be very bearish," says Vaclavik from CME Group in Chicago at the end of the trading day Tuesday. "The boxed beef market is also finally finding some footing after what had been a pretty sharp collapse."
Vaclavik says he'll be watching boxed beef prices and Wednesday's Fed Cattle Exchange for pricing transparency.
"Most areas traded $108 [cwt] last week," says Vaclavik. "We'll see if markets can improve on that despite that bearish Cattle on Feed report."
Prior to the Cattle on Feed report, Brian Splitt, a broker with Allendale Inc., told AgDay host Clinton Griffiths that prices have held together better than expected in 2017.
"We had a stronger rally than last year coming into roughly this same time of year," says Splitt. "December cattle topped out September 22nd last year and eventually fell below a dollar."
The market winds appear to be changing. Splitt says in August, producers flipped from making money to losing money.
"The break-even [prices] are moving higher, " says Splitt. "We see them at approximately $114 in September, $120 by October and we're projecting up to $124 by December."
Splitt says lower input prices, like corn, should help cattle industry margins.
"If the people that are buying corn are making money then they're going to continue to buy more of it," says Splitt.
