Derrell Peel Predicts More Large Placements in November Cattle on Feed Number

Photo by Todd Johnson, OSU Agricultural Communications Services
Listen to Ron Hays talk with Derrell Peel about cattle market changes.

Senior Farm and Ranch Broadcaster, Ron Hays, is visiting with Oklahoma State University Extension Livestock Marketing Specialist, Derrell Peel, about the recent fluctuation in the cattle markets.

Most of the impacts on the markets, Peel said, are from the futures side.

“Both futures and cash have gone up very sharply for many months, and so from a futures standpoint, you had a lot of long traders sitting on long positions that had a lot of money made on paper,” Peel said.

Peel said he considers what has happened over the last month as a large correction. The October Cattle on Feed report also had an impact, he added.

“The bigger-than-expected placement number kind of took the market by surprise, so we continued running it down,” Peel said. “It does have an impact on cash markets, so we have seen bigger feeder cattle prices come down- the ones that sort of match the feeder futures contract.”

 Because he considers this drop a “correction,” Peel said this means the markets will stabilize at some point.

“I think there is pretty general agreement now that we have overdone this correction,” Peel said. “The futures will go back up, and the cash will respond, because the fundamentals have not changed.”

As a new Cattle on Feed report is a few days away on November 17, Peel said the expectations going into this report are for another large placement number.

“The thing that is different is that we already expect it, so if it comes in as expected, even if it is a fairly large placement number, it probably won’t generate as much reaction in the futures market,” Peel said.

At some point after these large placement numbers, Peel said eventually, those feedlot numbers will decline dramatically.

“We haven’t changed the number of cattle,” Peel said. “We are just changing the timing of them.”

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