Despite the smallest calf crop in 60 years and extremely tight supplies of available feeder cattle, dry conditions across the majority of the United States have sharply lowered expectations for this year’s corn and soybean crop which has sent new-crop grain prices soaring and drastically weakened the demand for feeder cattle. Click here or on the image at right to view it at full size in a new window. June saw yearling feeder prices recede by $4.00 to $6.00 while calves traded $6.00 to $12.00 lower with dog-day summer heat rearing its ugly head and taking its toll, especially on lightweights.

Calf demand in May and early June subsided at about the same rate as the offerings, which kept prices for lightweights unevenly steady. Yearling supplies became progressively tighter through the month and prices gained $3 to $6 while the quality eroded for those available on the cash market. Click here or on the image at right to view it at full size in a new window.

Cattle markets have made a mild retreat this spring with fats and feeders dropping back about $10 from their most recent record highs in late winter. (Click here or on the image at right to view it at full size in a new window). It’s unclear whether the market simply needs to catch its breath or if demand cannot maintain the inflated levels. Just a few short weeks after the lean finely textured beef (LFTB) debacle started to subside, the beef industry confronted another consumer-sensitive food safety concern from a much more familiar villain.

An answer was finally reached to all those questioning “How high can these feeder cattle get?” during the 2011-2012 unprecedented commercial cattle market rally.(Click here or on the image at right to view it at full size in a new window). Typically, the feeder cattle market is measured by the price of a 750-pound long-time weaned steer calf or yearling steer, which is also the benchmark for the CME Feeder Cattle contract. The magic number appears to be “160,” as this was the level in which most mainstream cash markets and nearby futures contracts petered out.

Feeder cattle prices continued higher through late February with the full advance placed on old-crop stockers near the major grazing regions in the Central U.S. and on pee-wee calves (under 450 pounds) in the Southeast. Click here or on the image at right to view it at full size in a new window. Most calf orders are given out in “dollars per head,” which has turned up the heat on featherweights (under 350 pounds) in an attempt to stay under the strike price. Southern order buyers in places like Okeechobee, Florida, rallied 200-pound to 300-pound crossbred steers and bulls over $3 per pound during the first week of March as they became aggressive to fill Western orders.

The commercial cattle market has already surpassed most lofty predictions and the trajectory of the gains has cattlemen hoping that we have been climbing a plateau rather than a mountain peak. Click here to see larger view. Fundamental supply data sure support the idea that cattle prices can maintain current levels that are at or near all-time record highs. January’s semi-annual cattle inventory report showed that the total number of bovines in the U.S. is down a full 2 percent from a year ago.

Not only did feeder cattle markets make it through the holidays unscathed, but prices soared even higher once livestock marketing returned to normal levels. Unseasonably mild weather to open the winter season added fuel to the demand fire that raged inside calf buyers as virtually no fundamental hurdles can be seen to impede continued market improvement. "Click on the image at right to view it at full size in a new window."

Cattlemen enter the new year full of optimism after realizing the most impressive cattle and beef market performance in history, with record prices culminating right in the face of seasonal consumer demand preference for turkey and ham.

The fall run of feeder cattle marketing peaked out in late October and early November as nationwide auction receipts reached their heaviest point since January. Calf and yearling prices gained steady ground each week since the late September collapse of all commodity markets over global economy concerns.

It’s a busy time for both farmers and ranchers as corn and soybean harvest is over half done and the fall run of spring-born calf sales is well under way.