The market is still trying to figure out the ultimate long-run effect of the beta-agonist Zilmax™ being pulled off the U.S. and Canada market by its manufacturer Merck Animal Health. That question will only be appropriately answered over time.
A multitude of factors drive the price that producers receive for feeder cattle on any given day. Some of the more important drivers include deferred fed cattle futures, the price of corn, and forage availability. However, location is also a key factor.
There’s been an important shift recently in cattle price differences between fed and feeder cattle. Before the U.S. cattle industry can begin to fully rebuild after several years of contraction, it’s necessary for equity recovery to take place in the cattle feeding sector.
Feeder cattle buyers are increasingly seeking more management background on their purchases, with many working to build a network of preferred suppliers to source cattle that perform in the feedyard and help minimize economic risk.
Conditions during the past several years have provided the market with the luxury of being able to “borrow” early-harvested corn to provide some supply buffer. However, that luxury may not be so easy this year, given the planting delays and cool, wet weather for crop establishment.