Fed cattle trade took place at mostly $1 to $2 higher midweek.
After a week of the largest show list since Aug. 17, the show list the week before Christmas was nicely reduced. I suspect producers noticed the premium to the February contract and decided to push cattle into January.
It seems that January may be a month of higher marketing anyway. Historically, February basis tends to be on par with the futures to as much as a dollar over.
Winter time
Winter starts Dec. 21 and I think Mother Nature got an early start.
ADVERTISEMENT
On estimate, 90 percent of the time, we in the Upper Midwest tend to enjoy milder weather in El Nino winters while cattle country (Kansas, Nebraska, Oklahoma, Texas and even Wyoming) tend to be tough on winter weight gains.
This could be a plus for price improvement as we go toward April to June.
Overseas growth
The dairy cow liquidation should be done and milk prices have risen since the first day of September and this could put some demand for heifers for dairy use.
India is looking at 7.2 percent growth in 2010; China is pegged at 9.2 percent, and Brazil is at 4 percent. Keep in mind that Brazil won the bid to host the World Soccer Cup in 2014 and the Olympics of 2016. This should stimulate some growth in a country that already consumes a lot of beef. Argentine beef herds are down sharply because of consistent years of drought and lack of good pasture.
Developing nations are forecast to grow from 2.5 percent to 5 percent. Korea, Malaysia, Taiwan and Thailand are forecast to grow 2.5 percent to 5 percent as well.
Mexico loves beef. It also is enduring the toughest drought in 66 years and should import 20 percent more corn.
When demand starts to lift this market, producers who toughed it out will be holding heifers back for breeding purposes. The supplies tighten further. I think 2010 will be a better year for the cattle producer, barring a blip in economies. If growth starts, unemployment at some point will show a turn around. Demand will surface in the face of tight numbers.
ADVERTISEMENT
This article was composed before the Dec. 18 cattle on-feed report.
