This Week In Grass Cattle

Modest gains in the SEP, OCT, and NOV 10 have been largely followed by a lagging cash market. If this lag continues this week, expect some really good buys, especially in the heavier classes. I can't imagine however, that this cash market is going to continue to lag behind board this much so be looking to move early in the week.

As has been the case over the last month, mid- to heavy-weight heifers have been moving at fire-sale prices. I expect this trend to continue, but they might be a little more spendy by the end of the week. When you are looking at $75-$100+/head profits on mid- to heavy heifers, I can't see this yard sale lasting much longer.

The other thing to watch for is light heifers and steers, they are overvalued for the most part as far as grass and backgrounding goes. If you are looking to feed fat cattle they may pencil for most. But if you are in for a short-turn around, I'd steer clear for now.

Buy steers, medium 1, 626# @ $121.00
Lock 'em in on the NOV 10 @ $112.65
Grass for 65 days @ $0.72/day
Feed for 60 days @ $0.70/lb of gain
Sell at 864#
Breakeven: $107.74
Profit $42.34/head less basis and commissions

Buy steers, medium 1, 842# @ $110.39
Lock 'em in on the NOV 10 @ $112.65
Grass for 65 days @ $0.72/day
Feed for 60 days @ $0.70/lb of gain
Sell at 1029#
Breakeven: $105.27
Profit $72.79/head less basis and commissions

Buy heifers, medium 1, 664# @ $117.25
Lock 'em in on the NOV 10 @ $112.65
Grass for 65 days @ $0.72/day
Feed for 60 days @ $0.70/lb of gain
Sell at 876#
Breakeven: $107.66
Profit $43.65/head less basis and commissions

Buy heifers, medium 1, 766# @ $110.65
Lock 'em in on the NOV 10 @ $112.65
Grass for 65 days @ $0.72/day
Feed for 60 days @ $0.70/lb of gain
Sell at 953#
Breakeven: $105.07
Profit $72.18/head less basis and commissions

Buy heifers, medium 1, 830# @ $104.50
Lock 'em in on the NOV 10 @ $112.65
Grass for 65 days @ $0.72/day
Feed for 60 days @ $0.70/lb of gain
Sell at 991#
Breakeven: $102.46
Profit $100.97/head less basis and commissions

The last thing I'd look for this week is this scenario: A pretty fair jump in the NOV 10 early to mid-week and a lag in the cash. This scenario woudl be ideal for a grass/backgrounding outfit with potentially $100+/head profits. It will be a very small window to act upon but if that window opens, be prepared to cash-in on it. I would look for a $2.50-$3.00 jump on the board with little to no movement in the cash market. I think the mid- to heavy-weight calves are still going to work best and heifers might do a little better than steers in this scenario.

Example:

Buy heifers, medium 1, 766# @ $110.25
Lock 'em in on the NOV 10 @ $115.42
Grass for 65 days @ $0.72/day
Feed for 60 days @ $0.70/lb of gain
Sell at 991#
Breakeven: $102.46
Profit $128.42/head less basis and commissions

A big spread between the board and the cash may or may not happen, but if it does, I would look for this type of scenario.