Understanding feeder cattle risk

Market Update with Jerry Klassen: You don’t want to be using marketing tools to lock in a loss

The feeder cattle market has experienced extreme volatility over the past three years. For this reason, I’ve been writing on managing financial risk for feeder cattle and particularly for backgrounding operations and cow calf producers. In the first column, I discussed the mechanics of hedging, explained historical basis levels and using these basis levels to […] Read more

Short-term gains, long-term pains

The market still needs to discourage beef production — and that hurts

Fed and feeder cattle prices have been percolating higher recently as the markets adjust to lower-than-expected first-quarter beef production. Alberta fed cattle prices have been hovering in the range of $162 to $165, which is approximately $25 above break-even pen closeout values. Healthy feedlot margins allowed feedlots to bid up feeder cattle prices. Larger-frame steers […] Read more

Important to understand the futures

Market Update: Learn to use hedging tools when selling calves

Over the past year, I’ve received many inquiries from cow-calf producers about hedging feeder cattle. Most producers calve during the winter or spring and sell their feeders in the fall or the following winter after backgrounding. We’ve all seen how the prices can change within a six- to 10-month period. One of the most common questions I […] Read more

The 2017 market has flickering bright lights

Lower retail prices help to fuel increased beef demand

The price outlook for fed and feeder cattle prices has improved over the past month. First, beef production during the first half of 2017 will be lower than earlier anticipated. Second, offshore North American beef demand has strengthened in Southeast Asia due to lower exports from Australia. Third, Canadian exports of fed cattle and beef […] Read more

cattle in a feedlot

Market recovery still a year away

Market Update: Production is still high, start of beef herd contraction possible in late 2017

On top of the CBOT building in Chicago stands a statue of “Ceres” — the Greek goddess of grain crops and fertility. An old myth amongst traders is that after a major bull run in a market when traders usually did very well, the Greek goddess wanted her money back. Fed cattle prices have been […] Read more

Producers hit with ‘sticker shock’

Market Update: Bottom of the market may be in sight in mid-2017

There was an old saying on the trading floor — “Up the mountain; down the mountain.” After extreme highs; traders need to prepare for extreme lows. Earlier in summer, I thought the cattle markets would start to stabilize and maybe turn around in October. However, I have to eat my words because as of mid-October, […] Read more

The Markets: Good thing consumers are eating

High beef and pork production continues to weigh on the market

Fed and feeder cattle prices continued to trend lower in August and early September as the market absorbs the year-over-year increase in beef production. Alberta packers were buying fed cattle in the range of $133 to $136 in late summer; values we haven’t seen since January of 2014. Feedlot margins continue to erode and the […] Read more

Lower meat prices attract consumers

It’s still going to be a slow fall for prices, although expected to pick up in 2017

Cattle prices appear to be stabilizing as the market absorbs the surge in third-quarter beef production. Alberta packers have been buying fed cattle in the range of $145 to $148 in August while prices in the U.S. Southern Plains have been hovering around US$120. Wholesale beef prices have also held value, enhancing margins for packers. […] Read more

Market says plan on backgrounding cattle

Market Update with Jerry Klassen: Feedlot margins are not expected to improve until 2017

Alberta fed cattle prices dropped to a two-year low of $143 in late June as the beef complex absorbed the larger production. Cattle-on-feed inventories continue above year-ago levels, enhancing the weekly slaughter volumes. Wholesale beef prices have come under pressure and we are starting to see weakness in the retail market. Wholesale and retail beef […] Read more

A good year to consider backgrounding cattle

Prices expected to be weakest during the fall of 2016

The U.S. cattle herd has been in the expansion phase over the past couple of years and it is difficult for many producers to come to terms with the recent price activity. I’ve received many calls from both cow-calf operators and feedlot operators in regards to the price outlook and I basically focus on the […] Read more