Market Update – February 22, 2022

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Market analysis February 8, 2022

 

Drew Haynen, Van Zee Commodities LLC

 

Cattle:

         The cattle market has been stagnant in the last couple weeks. There has been very little news to influence the market up or down with cash fat cattle trade sitting close to $142-$143/cwt live. There have been some deliveries in the February month but now, with cash catching up, there shouldn’t be many more. I don’t see much changing in the next week or two with most packers feeling very comfortable with their inventory. and boxed beef pressured with fixing high prices and demand slowing a little. I think demand will pick up soon especially when we move into grilling season. The cold storage report in cattle was bearish to neutral with total beef up 1.4% over last year and up 2.9% over the five-year average.

Feeder cattle have been a little lower the past couple weeks with the rally in corn putting pressure on feed costs and feeder cattle prices. I am fairly happy with feeder cattle prices as fat cattle have not gone up at all and corn has been up 50 cents in the last couple weeks. It still feels like feeder cattle are getting shorter with drought conditions driving many of the feeder cattle to the lots early. I think in the next couple months prices should appreciate.

Grains:

Grain markets have been moving higher quickly. Traders don’t seem to care right now about what stocks to use ratios are. They are looking at an appreciable asset. They are also watching the Ukraine debacle unfold and are worried about a full invasion by Russia, which is a possibility. I personally think that Russia is happy with the small amount that they got and will not invade any longer. If they do though, that could throw a big wrench into the export markets for Ukraine, giving other exporting nations like the USA potential for more business.  South America is also still having some weather problems giving the bean market more upside than I was originally thinking. I am still hoping fundamentals will prevail and a nice correction is coming soon.

 

Cattle and Grain Markets for February 23, 2022
Month $/cwt
Cattle February 143.22
April 144.87
Feeders March 162.90
April 168.55
Corn March     6.81
May     6.79
Soybeans March   16.75
May   16.70

 

If you have any more questions or concerns or just want to discuss the specifics or potential risks and reward for different strategies, please call Drew Heynen at 712-722-3888.

 

The risk of loss in trading futures and options on futures can be substantial and may not be suitable for everyone.  This material has been prepared by a trading employee of Van Zee Commodities LLC and is, or is in the nature of, a solicitation. All sources used are believed to be reliable; however, any decisions made to buy, sell or hold a futures or options of futures position should not be solely based on this research and should not in any way be deemed to be endorsed by Van Zee Commodities LLC.  Van Zee Commodities LLC is registered with the Commodity Futures Trading Commission as an introducing broker and is a member of National Futures Association. 

 

Sheep and hay data compiled by Ross Bronson, Ag Risk Consultant, Redd Summit Advisors

Sheep:

Markets were down this week with San Angelo $10 to $15/cwt lower compared to last week. New Holland, PA had slaughter lambs $5 to 15 lower. Goldthwaite and Hamilton followed suit with $5 off. The USDA estimated domestic lamb and mutton meat production for the week ending February 12th totaled 1.78 million pounds on a slaughter count of 27,000 head down 160,000 pounds and 2,000 head when compared to the previous week’s totals of 1.94 million pounds and 29,000 respectively. Imported lamb and mutton meat for the week ending February 12th totaled approximately 5.73 million pounds which equates to 295 percent of the domestic production for the same period. 

Sheep markets for week ending February 18th, 2022
  Current Week Prior Week Percent Change Prior Year Percent Change
Feeder Lamb Prices, Medium and Large 1-2, 60-90 lbs, Wtd Avg, $/cwt.
           
Ft Collins, CO $347.06 $305.00 13.8% $260.00 33.5%
Newell, SD $261.01 $319.99 -18.4% NQ NA
Sioux Falls, SD NQ NQ NA NQ NA
Billings, MT NQ $319.99 NA NQ NA
           
Light Weight Slaughter Lamb Prices, Choice & Prime 1-3, 60-90 lbs, Wtd Avg, $/cwt.
           
San Angelo, TX $375.00 $393.00 -4.6% NQ NA
New Holland, PA $445.00 $450.48 -1.2% $321.11 38.6%
           
Slaughter Lamb Prices, Wtd Avg, $/cwt.
           
Neg. Pur. Live $226.86 $230.78 -1.7% $164.17 38.2%
Form. Pur. Carcass Base NQ NQ NA NQ NA
Comp.-Form. & Neg.Carcass Base NQ NQ NA NQ NA

*No Quote

** Not Applicable

 

Hay:

The Desert Southwest remains a strong spot in the hay market with good demand for new hay. Hay supplies are tight in the Pacific Northwest, and Great Basin regions. Dairies are driving a lot of the demand in other areas, but those in this region seem to have enough on hand to get them through to new summer crops.  Feedlots are seeing an increase in cattle on feed so demand from that sector is also increasing. Exporters are also still in competition for high quality hay. Freight continues to be a big concern for movement of stores with some areas seeing record high prices. Many areas of the West will see some precipitation this week, though it may be a small amount. The conversation, in large part, is still looking to summer harvest yields.

 

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