Calf market anxiety seen

Cattle Market & Farm Reports, Editorials
Jul 25, 2005
by WLJ

— Canadian cattle, corn prices and ID top concerns.
As summer continues its inexorable passage, cow/calf producers continue to be vexed by a number of questions about the market conditions they will face this fall.
“Guys up here are concerned about a number of things including the reopening of the Canadian border, fluctuating corn prices and the status of the animal ID issue come fall,” said Steve Paisley, beef cattle extension specialist for the University of Wyoming.
With good grazing conditions prevalent in a number of northern tier states, cattle producers are faced with a decision to either market calves early, taking advantage of more favorable markets, or leaving the calves on the cows until later in the season hoping for a market gain in the face of increasing Canadian feeder cattle imports, uncertain corn prices and a number of export markets closed to U.S. beef.
“Right now they have a good calf crop and enough grass to leave the calves on the cows until November or early December if they have to,” said Paisley, about Wyoming producers.
Current feedlot breakevens are expected to exert some pressure on fall contracts as cattle feeder losses rise well above the $100 per head mark. Jim Robb, director of the Livestock Marketing Information Center, indicated that imports of Canadian cattle are not expected to exert much pressure on calf prices until the fourth quarter.
“We don’t see significant imports of cattle for at least the next two months,” he said. Presently, Robb predicts good feeder pricing conditions will continue until near the end of the third quarter, with prices in the $113-$120 per cwt range for the southern tier and a couple of dollars higher in the northern states.
Robb cited corn prices as the most critical issue facing producers as sale time draws near. “We are facing a very uncertain situation in the corn market. A national harvest average below 130 bushels per acre could send the corn market well above $3 per bushel, while a harvest of 145 bushels per acre should result in a price closer to $1.90. That’s how volatile the market is right now,” he said.
As evidence of the corn market’s importance, Robb noted the historical correlation between price fluctuations in the corn and feeder cattle markets. “For every 10-cent-per-bushel increase in the cash corn market, there is a corresponding $1 per cwt, or larger, drop in feeder cattle,” he said.
The time frame for implementation of a National Animal Identification (NAID) system continues unresolved and will remain a question for producers as they prepare a marketing strategy for fall. The National Cattlemen’s Beef Association (NCBA) announced on July 6 that the organization had selected a technology partner in an effort to create a privatized system for NAID by October 2005. The NCBA claims the privatized system will balance the needs of producer confidentiality and cost effectiveness with the government mandated 48-hour trace back capabilities. On the same day, R-CALF filed comment with the USDA critical of privatization efforts and in support of governmental oversight.
While the USDA evaluates possible options, the two primary industry interest groups continue to work at opposite ends of the NAID issue in an attempt to balance the needs of all stakeholders in a very complex situation. - John Robinson, WLJ Associate Editor

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