Market Review

101 Livestock Market inc.
(831)726-3303

Sales every Tuesday; Small animals start at 9:30am followed by cows and bulls; Feeders start at 1:30 pm

Market Review Jan 31, 2012

I just wanted to send this report because the sales have been light and the price has picked up since the 1^st of the year.

The things that will impact how we market our calves and yearlings and the prices we get are as follows: First, the weather; as long as we continue to get some rain from here on out, we can still have a great season. Second, the market on cows and bulls is on the move up and look for it to take out the highs of last year. This week, cows close to 80.00/cwt and bulls close to 90.00/cwt.

The yearlings have jumped up a little each week after January 1^st because the fat cattle future for fall is around $130.00. The yearlings have started to move-up also. The future for May feeder cattle around 157.00 on 750# steer. We expect that market to move higher also. Calves should be called on fire and will also move higher into spring as summer grass buyers scramble to fill their range.

If we look at the factors influencing prices, there are many; exports, supply, demand, imports, and forward contracts. Our total herd is 3% less than last year reducing the total supply. We have increased exports faster than imports thus creating another vacuum in the supply chain. That situation will not change in the future at least through 2013. So we continue to recommend to stay in the cow business. We also do not think selling cattle on forward contracts makes sense in an up market. While video sales for spring delivery look good, I think this is the time to wait and let the market come to you. I firmly believe we will see our highest price cattle when they come off the grass and not before.

There is one factor to keep in mind, that is corn. We have an unusual weather pattern developing in the mid west; a very warm, dry winter. If that pattern continues and corn prices rally, then the price of yearlings this spring could come under pressure.