As owner-operator Lance Mason prepared for sale day this week at Northwest Stockyards, there was a little extra excitement in the air.
Enhancing the mood was the realization that lightweight feeder steers were widely trading at more than $2 a pound.
“Everybody’s been excited about the prices,” Mason said. “It will be a very good sale.”
Feeder cattle prices were already running about 20 percent higher than a year ago before they got another boost from a mid-January government feed grain report pegging corn supplies higher than the trade was expecting.
As a result, corn prices plunged and U.S. feeder cattle futures at the Chicago Mercantile Exchange rallied to new highs. Cash cattle prices throughout the region rose by $2 to $3 a hundredweight.
“Going forward, as demand for grass cattle grows, the lighter cattle should go even higher,” Mason said, adding that the drought has become less of a factor compared to six months ago.
While lightweight feeders have the most sizzle, fed cattle and replacement heifers are also trading higher.
“There is a lot of optimism, no matter who you talk to,” said Mike Griebel, a field representative for Burlington Livestock Exchange in Eastern Colorado. “It’s a great time to be in the cattle business.”
“Numbers-wise, this will be our best January on the books,” he added. “Our receipts right now are better than they’ve ever been.”
Consignments for the week were running about 1,000 head more than what the facility would normally see at a January sale, he estimated.
Terry DeVaughan, general manager of the Syracuse Commission Company in Western Kansas, said he was seeing a bump in sales traffic at his facility as well.
“The markets are as good as we’ve ever seen them,” he said. “Anybody who has cattle to move, they are wanting to take advantage of it. If they are thinking about selling, it’s probably time to do that.”
Buyers have stayed aggressive, despite the price tag, DeVaughan added.
“The big feeding operations want to maintain their numbers,” he said. “A lot of times they either got their feed bought right or hedged their cattle and grain costs.”
Despite recent relief in feed grain prices, corn still has potential to be volatile. While the Jan. 12 stocks report was bearish, the U.S. Agriculture Department forecast predicts both domestic and global supplies of corn will be fairly tight by summer’s end.
Still, DeVaughan pointed out that tight cattle supplies have become the overriding factor. Many areas, Southwestern Kansas included, accelerated herd liquidation last year due to drought.
Meanwhile, overseas meat sales have continued gaining ground. In 2011, exports of U.S. beef muscle cuts rose 27 percent compared to the previous year. And many economists believe there is plenty of room for markets in Korea, Japan, Canada and Russia to grow even more.
All of those factors lead to projections that the live cattle market will be on an upward swing for the foreseeable future.
“I don’t think 2012 is the peak in this thing,” said Derrell Peel, Oklahoma State University livestock marketing specialist in a recent radio interview distributed by Kansas State University. “The thing that hasn’t kicked in yet is the pronounced heifer retention that will be part of the early stages of rebuilding the herd. That’s where we would expect to see the highest prices in this whole process.”
That could mean still higher prices extending into 2013, with the wildcard being future forage and range conditions.
“I think the industry is ready to rebuild a little bit,” Peel said. “In fact, I think it wanted to do that in 2011, but the drought pre-empted it.”
In Burlington, Colo., Griebel admitted buyers were seeing things from a little different perspective than sellers but were still sharing in the good spirits.
“I’m in the stocker-feeder business, so it is kind of scary being on that side of it,” he said. “But there are things you can do to protect yourself and manage your risk. There’s a lot of people smiling right now, and it’s fun to see.”
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As owner-operator Lance Mason prepared for sale day this week at Northwest Stockyards, there was a little extra excitement in the air.
Enhancing the mood was the realization that lightweight feeder steers were widely trading at more than $2 a pound.
“Everybody’s been excited about the prices,” Mason said. “It will be a very good sale.”
Feeder cattle prices were already running about 20 percent higher than a year ago before they got another boost from a mid-January government feed grain report pegging corn supplies higher than the trade was expecting.
As a result, corn prices plunged and U.S. feeder cattle futures at the Chicago Mercantile Exchange rallied to new highs. Cash cattle prices throughout the region rose by $2 to $3 a hundredweight.
“Going forward, as demand for grass cattle grows, the lighter cattle should go even higher,” Mason said, adding that the drought has become less of a factor compared to six months ago.
While lightweight feeders have the most sizzle, fed cattle and replacement heifers are also trading higher.
“There is a lot of optimism, no matter who you talk to,” said Mike Griebel, a field representative for Burlington Livestock Exchange in Eastern Colorado. “It’s a great time to be in the cattle business.”
“Numbers-wise, this will be our best January on the books,” he added. “Our receipts right now are better than they’ve ever been.”
Consignments for the week were running about 1,000 head more than what the facility would normally see at a January sale, he estimated.
Terry DeVaughan, general manager of the Syracuse Commission Company in Western Kansas, said he was seeing a bump in sales traffic at his facility as well.
“The markets are as good as we’ve ever seen them,” he said. “Anybody who has cattle to move, they are wanting to take advantage of it. If they are thinking about selling, it’s probably time to do that.”
Buyers have stayed aggressive, despite the price tag, DeVaughan added.
“The big feeding operations want to maintain their numbers,” he said. “A lot of times they either got their feed bought right or hedged their cattle and grain costs.”
Despite recent relief in feed grain prices, corn still has potential to be volatile. While the Jan. 12 stocks report was bearish, the U.S. Agriculture Department forecast predicts both domestic and global supplies of corn will be fairly tight by summer’s end.
Still, DeVaughan pointed out that tight cattle supplies have become the overriding factor. Many areas, Southwestern Kansas included, accelerated herd liquidation last year due to drought.
Meanwhile, overseas meat sales have continued gaining ground. In 2011, exports of U.S. beef muscle cuts rose 27 percent compared to the previous year. And many economists believe there is plenty of room for markets in Korea, Japan, Canada and Russia to grow even more.
All of those factors lead to projections that the live cattle market will be on an upward swing for the foreseeable future.
“I don’t think 2012 is the peak in this thing,” said Derrell Peel, Oklahoma State University livestock marketing specialist in a recent radio interview distributed by Kansas State University. “The thing that hasn’t kicked in yet is the pronounced heifer retention that will be part of the early stages of rebuilding the herd. That’s where we would expect to see the highest prices in this whole process.”
That could mean still higher prices extending into 2013, with the wildcard being future forage and range conditions.
“I think the industry is ready to rebuild a little bit,” Peel said. “In fact, I think it wanted to do that in 2011, but the drought pre-empted it.”
In Burlington, Colo., Griebel admitted buyers were seeing things from a little different perspective than sellers but were still sharing in the good spirits.
“I’m in the stocker-feeder business, so it is kind of scary being on that side of it,” he said. “But there are things you can do to protect yourself and manage your risk. There’s a lot of people smiling right now, and it’s fun to see.”
