Over the last month, we've watched both the live cattle and feeder cattle contracts spiral lower as the market seemed to be a feather in the wind to the ongoing avian influenza story. Through this time, there's been a lingering thought in the back of all cattlemen's minds: What is the feeder cattle market going to do this summer/fall?

This is why I'd like to spend some time today talking about some of the biggest influencing factors currently affecting the feeder cattle market.

SEASONAL TRENDS

In both 2022 and 2023, the feeder cattle market pinned its yearly high in late August/early September, and at the time of this writing, there is a $13 price spread between May 2024 and August 2024 feeder cattle contracts. Seasonal trends are a reliable tool in the cattle industry, but in years like this, the market could see abnormal buying/selling behaviors from both cattlemen and feedlots alike.

The market is currently painting a picture that would align with its typical seasonal behavior, but you should also be aware that feedlot buyers and order orders were more aggressive in the first quarter of 2024 than normal, and to date, feeder cattle imports from Canada are up 8.9% compared to a year ago, and feeder cattle imports are currently up 12% from Mexico.

FEEDER CATTLE DEMAND

The feeder cattle complex has seen tremendous demand through the early months of 2024, and given that the U.S. beef cow herd remains at its lowest inventory in the last 61 years, feeder cattle demand through the latter half of the year should remain strong as well. Even though feedlots were more aggressive than normal in procuring feeder cattle in the first quarter of 2024, the simple fact remains that they've got to keep their pens full to play the game. Historically speaking, the market sees the most feeder cattle placed in May, September and October. Yes, the timing of placements may be different this year than in the past, but for feedlots to have cattle ready to market next spring, buying in the second and third quarters of 2024 is nonnegotiable.

BEEF DEMAND/ECONOMIC STRESS

If the live cattle complex was seeing stronger beef demand, cattlemen would be less concerned heading into the summer. But with consumers tired and taxed from relentless inflation, cattlemen are concerned about beef demand heading into the market's prime grilling season.

From now through the Memorial Day weekend and into June, it is an essential timeframe for beef demand. If demand doesn't see more interest, packers could elect to dial back processing speeds which would consequently back up fed cattle supplies early in the summer and gravely affect the market's overall morale, likely having a negative spillover effect on the feeder cattle complex.

CATTLE COMPLEX OUTLOOK

I remain guardedly bullish in my outlook for the cattle complex through the remainder of 2024. I believe the feeder cattle complex has more in store for 2024 and the April 19 Cattle on Feed report helped refocus market participants. To be truthful, I think this year may be one of the hardest to predict as the market's bearish and bullish influences are both extremely boisterous. When looking at the market soberly, you cannot dismiss the market's strong fundamental position regarding limited feeder cattle supplies nor can you afford to blindly look past the external influences of our economy, the fact that it's an election year and that the market is highly reactionary to any news developments such as the avian influenza story.

Marketing your feeder cattle this year may take more market attention and strategy than originally assumed as even though the market remains historically high, there are immediate challenges present that cattlemen will have to navigate around. Stay engaged in the markets' trade and remember emotional decisions rarely pay dividends in the long run.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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