On Friday, Oct. 8, the USDA slashed projected average corn yield estimates from 162.5 bushels per acre to 155.8 which delivered a shock to the agribusiness community that is rarely seen from a single USDA published report. Since then, CBOT corn markets have routinely made limit moves in both directions while cattlemen and farmers watch in bewilderment and “noncommercial interests” profit without handling a kernel. Feedcosts have nearly doubled from what cattle growers were expecting for the final quarter of 2010 which has taken its toll on feeder cattle demand, however the rather surprising strength of the finished cattle market has helped temper the sell-off.
Calf prices actually ended October very near the same price levels that they started the month; after four long weeks of huge market swings and buyers jumping in and out of the market. Dry conditions have been ideal for a brisk corn harvest with 83 percent already in the bin by Oct. 24 compared to just 20 percent last year at the same time. However, parched pastures in the Southeast have forced calves to town early and the lack of rain in the Southern Plains winter wheat region has left cattle growers in this area wondering if they will have any wheat pasture grazing at all. Some long awaited moisture was received late in the month and stocker buyers sent out orders for lightweight calves, in hopes of cheapening them on wheat pasture gains and then either taking them right to grass next spring or peddling them if the market conditions are right.
Calf supplies are expected to be tighter than usual this winter as overall inventories are smaller, plus many cow/calf producers are selling right off the cow this year as supplemental feeding during the weaning process does not pencil out so well. Seasonal sickness problems on new calf purchases are right on time, with dusty and unusually warm temperatures making the situation even more chronic. Calf marketing through the rest of the fall and winter will hinge on the buyer’s ability to limit his/her feedcosts and still hold weight and health conditions together until spring.
The availability of true yearlings was extremely limited during October as most shipments were previously contracted and did not sell on the spot market. There were sales of longtime weaned early spring calves that could be related to yearlings, even though the cattle are only 8 months old. Demand for feedlot replacements remained good through the turbulent market times of October and in most cases was more than enough to compensate for the limited offerings. Price levels moved up and down through the month (but not nearly in as wide of ranges as the calves) and closed the trading session slightly higher with help from the surging fed market.
Direct slaughter cattle sales backed up about $3 per hundredweight early in the month and then shot-up by $7 per cwt - blowing by the $100 resistance point as packers became aggressive in response to liberal out-front wholesale beef movement, especially for export as the weaker US dollar resulted in bargain shopping for our foreign customers. Market-ready supplies of finished cattle are still tight and should remain so until late in the year when heavy August placements become ripe. 
Corbitt Wall is officer-in-charge and the Missouri federal-state supervisor at the USDA-Missouri Livestock and Grain Market News Service.
