CME Prices Return To More Normal Levels, April Leads

By Jeff Rose

The fed cattle market is moderating as beef demand slows heading into fall. Nearby futures prices are $8 to $11 per hundredweight below the all-time highs recorded in late August. Deferred months are mostly only $3 to $5 below their highs.

Overall, Chicago Mercantile Exchange prices are starting to resemble more familiar levels. April is the leader again, with December and February slightly behind.

The spot month is no longer the leader, as it had been since early spring. Basis levels appear to be returning to normal, with the October board back ahead of the cash price in the $5 area for now.

Supplies remain tight, and packer margins remain weak. A recovery in demand heading into winter will be key to maintaining and building on current prices.

As always, many factors influence demand, with the economy being central. Inflation and energy prices are trending in the right direction, and trade deals continue to be made.

President Trump has advanced peace in the Middle East, while a deal in Ukraine remains elusive.

Meanwhile, an aging producer population may impact future markets, as older producers elect to reduce cow-calf operations.
Beef is in a strong position, and prices likely would have been higher sooner if not for overall inflation putting pressure on American consumers over the past few years.

Feeder cattle prices are rising again, with lower feed costs boosting interest in filling pen space. Cattle feeders have a lot of capital invested right now.

Please keep an eye on your break-evens and look for opportunities to lock in profits on at least some of your production.