Jaeson Parsons with Zaner Ag Hedge reports:
The outlook for the cattle markets remains bearish as the industry awaits the next round of Cattle on Feed data. According to Tim Hackbarth, Senior Livestock Strategist at Zaner Ag Hedge, the current problem with the cattle market is an excess of animals available for slaughter.
“Though it’s fixing a longer term problem by catching up to what we have produced right now, 600,000 head a week being slaughtered is bearish to the markets right now,” Hackbarth says. “As many in the industry know, lack of currentness should limit upside potential. Going forward, it will be at least until the calendar year of 2017 before the markets will see a sustained bounce in the pricing. However, at the moment, the big kills – week in and week out – are needed.”
Hackbarth says cash prices seemed to have bottomed for now, though there may be more downside in the near term. Cash was up last week, and prices look to remain steady this week, he adds.
Both Hackbarth and Ted Seifried, VP of Zaner Ag and Chief Market Strategist, agree that the 10-handle bounce is viewed as good enough to hedge more as the market awaits the data from the USDA’s Cattle on Feed report later this afternoon.
“Looking for placement of 113% from a year ago and marketing is 117% from a year ago is certainly not bullish,” Hackbarth says. “We will see how those numbers come in.”
Cheap feed is only a small part of the equation, he says, adding he predicts “the market will have more bumps in the road ahead.”