Higher, higher and higher is the mantra of the feeder cattle market, which has been on a rally of extraordinary strength. It’s just amazing that this market has been on a three month roll and nothing is holding it back.
It’s been quite a summer for calves and feeder cattle. The market took off in June and hasn’t looked back. Ever smaller supplies of feeding cattle have forced cattle feeders to dig deep into their pockets if they want to keep their yards operating efficiently.
Live cattle markets finally moved off the six-week average of $119 last week when Tyson foods announced that they would not be buyers of cattle fed the beta-agonist Zilmax. The announcement came on Aug. 7 during the National Cattlemen’s Beef Association (NCBA) midyear conference in Denver.
All of a sudden, the Environmental Protection Agency (EPA) has come to their senses about the Renewable Fuel Standard (RFS) mandate and finally realized that cellulosic ethanol won’t be a big contributor to the ethanol mix for a while.
Fed cattle markets have been pretty dull this past July. The cash price for fed cattle was $119 every week of the month. Futures markets have also been dull, with the August contract staying in a $3 trading range for the month. We know that July is typically the hardest month on the fed CROW.
The December corn contract broke below $5 last week, which seemed like a major support level. Some of the latest corn reports are suggesting we’ll have a good pollination season despite the late planting, and there appears to be confidence that we’ll have a record-setting corn crop this year.
The House of Representatives may have put the cart ahead of the horse on their recent farm bill project. Last week, the House narrowly passed a farm bill that excluded any food assistance programs. Separating the two pieces of legislation is a good idea in my CROW.
It looks like the gloves are off in this industry battle for a bad Country of Origin Labeling (COOL) law. Last week, eight U.S. and Canadian meat and livestock industry groups filed suit against USDA for injunctive relief regarding COOL.
I get the feeling that Canada and Mexico decided not to wait around for WTO tariffs and may be starting to sidetrack some U.S. beef markets. Logistically, it wouldn’t make sense for Canada to bring in beef from Mexico in any kind of volume to intentionally damage U.
One thing I learned is that animal agriculture activists come in all shapes and sizes and can camouflage themselves very well. You might be visiting with a guy who has all the right credentials and shares some of the same opinions, but he just might turn out to be the wolf in boots and a cowboy hat.