October 2021 Cattle Projections

Posted: October 4, 2021 | Written By: Heidi Doering-Resch, Form-A-Feed

October 2021 Cattle Projections

October is the time of year that most of us look forward to as a lot of winter and spring prep work come to fruition.

Crops are being harvested, and we have a decent outlook on what we will be facing for the upcoming cattle feeding season. We are weaning or purchasing weaned calves to fill yards and looking to lock in profits and market our feedstuffs through cattle. This months cattle feeding projections show a little bit of softening in cost of gains (COG), but much of that has to do with input costs softening a little as harvest is under way.

Most times we discuss volume of trade in relation to commodity prices and supply and demand. The current stigma we are stuck in relies solely on supply and demand as it continues to be chain space that deflects our prices from reaching past years levels. Should we have more chain space open up, producers would be in a better position to control a little of the margin. As it sits now, the packer continues to bid based on when he needs cattle to fill an open chain space, continuing to back log the system and hold the upper hand.

Commodity prices certainly depend on region as corn basis is reaching some of the highest levels in some areas that we have ever seen. If you are sitting in a heavy drought area, your corn basis is extremely positive over those who are sitting in areas that received more rainfall and snow cover. Due to this, the cost of distillers alongside pressure to dry and export it as dry distillers grains is causing the distillers market to remain high and reach higher levels than what should be predicted. The spread on modified ranges anywhere from $95/ton to $135/ton depending on your region. Because of these facts, it is so important to have your projections run using your feedstuffs that are available to you at costs that are reflected in your area.

Not a lot of red in the projections ran this month; a nice change compared to some of the last few months. Cattle placements will continue to increase in the following weeks and the cost to raise these cattle for a profit will certainly depend on your region. Be sure to take time to sit down prior to purchasing lots of cattle and figure both inventory and COG on these cattle. With the amount of market variability, the more unknowns you can remove from your feeding period, the less stress and more predictability you have.