Very light trade developed Wednesday at $158-160 live in Minnesota and $250 dressed in Nebraska and Iowa, but at levels too low to set the week’s trend. Still, the early trade at $3-5 higher live and $5-8 higher dressed caught the market’s attention. Live futures closed strong on Wednesday and followed suit on Thursday.
The National Restaurant Association’s Restaurant Performance Index (RPI) for July was released at the end of August. The index registered a modest decline in July as a result of a dampened outlook among restaurant operators.
“However, I believe we get past Labor Day and further into the month of September and the market will be dealing with increased supplies of competing proteins and heavier carcass weights. This likely resumes the recent downtrend in cash cattle prices from the historic highs posted earlier [in August].
“One operation we tracked had heifers weaned in 2010 and 2011, what those heifers were and what their accumulated expenses were over the two years to the point where they were heavy bred. Their expenses totaled $1,100-1,400 a head. That ranch was pretty efficient and did a good job of reducing their expenses.
The Aug. 1/July Cattle on Feed report was released Friday, Aug. 22. While everything was predicted down— and everything was down— things weren’t as down as analysts expected. The report has been called mixed neutral to bearish, particularly for record low placements that still disappointed expectations, and for the lagging marketing rate.
Since the early 1970s, the Livestock Marketing Information Center (LMIC) has estimated cow/calf returns over cash costs plus pasture rent based on typical production and marketing practices in the Southern Plains, but does not include other economic costs like family labor and management.
As with the prior week, cash fed trade developed earlier than usual last week. A trickle of trade began Tuesday with Wednesday seeing the majority of trend-setting prices. Trade on Thursday was in clean-up mode as almost 70,000 head were confirmed sold week-to-date.
With all the rain in July, things are looking a little more optimistic for wheat and stocker cattle operators than in the past four years in the Rolling Plains of Texas and southern Oklahoma, according to a Texas A&M AgriLife Extension Service specialist.
The tax law defines a hedge as a transaction in the normal course of business to minimize the risk of price change with respect to inventory or supplies. This requires a producer to have a hedging position that’s opposite the physical position on the farm and within normal production ranges.