Feeder Cattle Economic Value – 02/01/2022

The USDA’s January 1 US Cattle Inventory survey resulted in calculated feeder cattle supply of 25.5 million head, down 700 thousand head from a year ago. The accompanying table displays the derivation of the January 1 feeder  supply. We have prepared a scatter study displaying the average feeder price (650-750 pounds basis the Midwest) as a function of the supply of feeders on January 1. The study suggests an average feeder cattle price between $170 and $200. On February 1, 2022 Nearby feeder futures are trading at $162 and May feeders at $172.

One negative factor in the feeder cattle market is the high cost of grain. Of the three major factors impacting feeder prices, the value of finished cattle, feeder supplies and grain costs,  grain prices are the least but still significant enough to keep feeders trading in the lower to mid point of our forecast range.