Volatile futures markets, drought concerns and uncertainty over outside market pressures are creating new challenges for cattle producers, even as cash cattle fundamentals remain strong, according to Brad Kooima of KKV Trading.
“It feels to me like the cash is all right. It feels to me like the June futures, the front month, is all right,” Kooima said. “I’m not sure about any of the rest.”
Kooima said large swings in cattle futures reflect growing nervousness among traders as outside influences continue to pressure the market.
“There’s so much noise in the background right now that I think some of our long speculators are getting a little exhausted,” he said.
Kooima said drought conditions across parts of the western Plains are beginning to influence feeder cattle movement, with some areas seeing heavier-than-normal marketings as producers respond to tightening forage conditions.
He pointed to Wyoming as an example.
“Torrington, Wyoming last week had 9,000 cattle for sale at a time when they probably wouldn’t have any cattle for sale other than a few weigh-ups,” Kooima said.
He said similar dry conditions stretching into western Nebraska are also starting to push cattle to town earlier than usual, which could show up in upcoming Cattle on Feed data and add another layer of volatility to the market outlook.
“The cash feeders are strong, period — lack of supply,” Kooima said. “But you’ve tilted that a little bit because of the drought.”
Kooima encouraged producers to pay attention to risk management opportunities as volatility continues.
“There’s a highly volatile market,” he said. “Think a little bit about risk management here.”
Other topics discussed
- Declining open interest in cattle futures
- Feeder cattle volatility and sideways trade
- Concerns ahead of the Cattle on Feed report
- Fort Morgan packing plant shutdown
- Algorithmic trading in cattle markets
- Mexican cattle and beef imports
- USDA boxed beef transparency concerns
- Expanded CME cattle trading limits
- Independent cattle producer profitability