The agriculture industry has grown accustomed to wide price swings and daily limit moves of Chicago Board of Trade grain contracts, while the gains have recently far outweighed the losses. Meanwhile, beef cattle inventories are the lightest in 60 years with healthy export demand for our high-quality product and producers yet to begin rebuilding their herds. The peak of the fall-run also witnessed the collapse of arguably the largest and most well-established feeder cattle order-buying firm in the U.S.
Steer and heifer calves sold mostly $3 to $5 per hundredweight higher for the month of November with the least increase posted on the heavier feeder calves (over 600 pounds) and the full advance on lighter weights with featherweights (under 400 pounds) actively trading in excess of $10 higher. Backgrounders are essentially acquiring their spring grass stockers a full month before winter arrives, as the writing is already on the wall that lightweights will reach never-before-seen price levels by the time pastures green up again. Cow-calf producers have responded by marketing their calves earlier and at lighter weights to fill this order, and at the same time saving themselves the expense of commodity feeds and the extra wear on their mother cows, which can now beef-up for the winter. As calf prices have escalated this fall, so has the steer/heifer spread or discount, which is currently running near $25 on a 500-pound calf in many areas.
Yearling supplies have been seasonally tight late this fall, but longtime weaned calves have partially filled this void as early spring calvers continue to raise the bar on weaning weights and efficiency. Feedlot replacements traded $1 to $2 per hundredweight higher for the month with weights and price levels starting to lose their inverse relationship. However, cattle feeders have mostly shrugged-off higher feed costs as many believe they have the recipe to keep cost-of-gains under control. Fed cattle prices remain strong and have found sound support near the century mark, which is high enough to satisfy most feedlot managers but close to the resistance level packers are reluctant to cross. As usual, a cattle feeding investment does not appear favorable at current feeder and feed prices – but most cattle feeders figure if they can’t make it work with fat cattle bringing $100, then they need to do something else for a living.
This most recent rally in grain prices will most likely prompt landowners to plow up even more of the dwindling acres of tight pastureland. Between the expansion of row cropping, urban sprawl and conservation, the space available to run a mama cow continues to disappear. Plus, the average age of the cow-calf man is closing in on retirement and the next generation has either moved to town or been spoiled by the conveniences of agriculture by modern machinery. Year-to-date beef cow slaughter is running 16.6 percent larger than the five-year average, which includes the huge sell-off year of 2008. Cattle production has a bright future for those with the opportunity and the willingness to put in a hard day’s work (year-round).
Cattlemen have a reputation of doing business with a handshake and taking a man’s word in the same confidence as a signed contract. Businessmen in other fields typically shake their heads at the trust cattle people have in each other. This past month that trust took a hit and it should remind producers that a (3 percent or less) commission is a cheap price to pay for a guaranteed custodial account check and the services provided. 
Corbitt Wall is officer-in-charge and the Missouri federal-state supervisor at the USDA-Missouri Livestock and Grain Market News Service.
