Market Update – March 22, 2022

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Market analysis March 22, 2022

 

Drew Haynen, Van Zee Commodities LLC

 

Cattle:

         The cattle market has basically been trading sideways for two weeks. There has been little news to push the cattle one way or another. Cash has been fairly steady trading from $138/cwt to $140/cwt live and just will not give the board any good direction. The boxed beef market has been good, moving up close to five dollars in the last couple weeks. I still believe the rally is coming, but I think there are two things that are currently hurting the market. First, the fear of a recession and inflation has traders believing consumers are going to start eating pork and chicken. The cost of all goods right now is so high that disposable income is down. This does have some people looking for cheaper foods. Second, the cost of feed is still moving higher. This has feedlots moving cattle earlier which is giving packers the upper hand. I think this should help later when weights are down and there are fewer fat cattle for packers to bid on.

Feeder cattle have also been in a trading range the last two weeks. These fat cattle problems and grain issues have feeder cattle in a rough spot. I don’t see anything really changing in the feeder cattle until fat cattle can start moving higher or grains start to move substantially lower.

Grains:

The grain markets have been crazy. This Russian war has so much uncertainty that traders don’t know what to do. There are so many more questions than answers. Will Ukraine be able to harvest winter wheat? Will they be able to plant? If they do plant, will people keep their crops in good shape, like spraying and fertilizing? If everything goes well for Ukraine, will they be able to export any of their grains? No ships are going into those ports currently because of war and insurance problems. Now the same questions that I have with Ukraine I have with Russia. They get seed from overseas. Will they be able to get their seed? If they get planted, can they export any of that grain? Will there be sanctions left on Russia?

 

Then there are questions on the USA crop. There is a ton of fertilizer that comes from Ukraine and Russia. This could have farmers changing crops and fringe farmers for sure are looking into other crops than corn. The weather in the USA also is still somewhat dry. Summer rains will be needed in order to grow the crop that to fulfill our needs next year.

Cattle and Grain Markets for February 23, 2022
Month $/cwt
Cattle April 138.85
June 135.25
Feeders March 156.00
April 160.45
Corn March     7.57
May     7.34
Soybeans March   17.15
May   16.96

 

If you have any more questions or concerns or just want to discuss the specifics or potential risks and reward for different futures 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 $30 to $50/cwt off compared to last week. New Holland, PA trended steady to weak. Fredericksburg was $5 off and Hamilton was $10 to $20 lower. Goldthwaite came in $5 to $10 lower this week as well. The USDA estimated domestic lamb and mutton meat production for the week ending March 12th totaled 2.28 million pounds on a slaughter count of 34,000 head compared to 2.14 million pounds and 32,000 head the previous week. Imported lamb and mutton meat for the week ending March 5th totaled approximately 6.53 million pounds which equates to 305 percent of the domestic production for the same period. 

Sheep markets for week ending March 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 $313.57 $305.00 2.8% NQ NA
Newell, SD NQ $289.00 NA $229.00 NA
Sioux Falls, SD $332.63 $325.00 2.3% NQ NA
Billings, MT $262.50 NQ NA NQ NA
           
Light Weight Slaughter Lamb Prices, Choice & Prime 1-3, 60-90 lbs, Wtd Avg, $/cwt.
           
San Angelo, TX NQ $355.99 NA $290.16 NA
New Holland, PA $403.65 $420.03 -3.9% $305.14 32.3%
           
Slaughter Lamb Prices, Wtd Avg, $/cwt.
           
Neg. Pur. Live $212.23 $215.64 -1.6% $172.94 22.7%
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 last two weeks have been a bit of a tug of war. Dairies and exporters are still vying for the same supplies. While they don’t like the price, some have no choice but to buy due to their own low supplies, buying on an as need basis. On the other side are growers who are hesitant to sell with uncertainty about yields for this upcoming season and potential increases in price. In addition, the input costs are rising dramatically with little idea for when they may correct. Many growers are considering alternatives, or lower applications for fertilizer. This may decrease yields, which will possibly compound the hay shortage.

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