SPRECHER: This is Doug Hjort on Market Plus. We're going to talk a little bit about feeder cattle, we didn't address it in our regular program, the broadcast very much. So, feeder cattle have had a very interesting year but not such an interesting week.
HJORT: Well, that's right especially in the futures market. Back a couple of months ago they seem to have hit their peak and did hit their peak and sold off pretty hard, rallied back a little bit and now this week really got hit hard again, two to three dollars down. But in the last month or six weeks, whereas the futures have been having some trouble and struggling to try to rally, the cash market has been improving. Even this week the Oklahoma City average price, that's all the weights of feeder cattle, was up over a dollar and several of the local sale barns were steady, maybe up a little bit here and there. So, it's an interesting situation, you've got fat cattle topping out at eighty bucks, eighty-two bucks this week, two bucks over the last peak we saw three weeks ago but it actually hurt, it seemed to hurt the feeder cattle futures anyway.
Now, when you do look on down the road, of course, you know the distant live cattle futures are at a discount to the nearby futures so that takes away a lot of the glory of trying to buy feeder cattle now and then hedge them out there whereas that probably worked four to six weeks ago, it's a pretty tight situation now, probably can't cover it on the board same day you buy the feeders.
SPRECHER: Can feeder cattle work for the feed yard at these prices?
HJORT: Not very well, you're kind of betting on the come once again. And with the discount in these prices, let's say that feeder, or that fed cattle prices stay above this eighty dollar mark for another month or six weeks which they certainly should do given the lineup of cattle we have in the feed yards. And by the way, if the feedlot managers will do a good job of marketing and keep these cattle moving the market on this higher money, that will last longer, we'll be in the high 70's, low 80's well into the spring.
But on feeder cattle, that discount and the distant futures prices for fat cattle is still going to limit something. So, you're going to have to be buying these cattle and hoping that those distant futures or cash prices, by the time you get there, are a little bit better. So, it's really a struggle once again, nothing new in the cattle business, of course, very seldom you can buy feeders and lock up profits the same day in the fat market when they might come to market down the road and it's pretty tough right now.
SPRECHER: Thanks Doug, that's Market Plus.