“Cattle prices are no longer built on a foundation of long-term cycles in cattle numbers. Today, cattle price changes are dominated by rather short-term factors that can be abrupt,” say analysts with the Livestock Marketing Information Center (LMIC) in their recent market outlook.

The latest shock, of course, being the economic recession bogging down domestic and global markets.

According to LMIC, fed-cattle prices (basis Southern Plains steer) were $8.70 (9%) below a year earlier during the first six months of this year; about $5 of that due to byproduct values. Despite declining feed costs, LMIC analysts point out feedlots have operated in the red for 26 months through July.

Southern Plains feeder steers (700-800 lbs.) were $9 lower on average during the first quarter; Southern Plains steer calves (500-600 lbs.) were down $11.05. Both gained back about $6 in the second quarter.

Though the primary wild cards remain corn, demand and the world emerging from economic recession, the LMIC folks note bullish supply fundamentals and the absence of market shocks should boost 2010 prices above those received this year.

Specifically, the folks at LMIC expect prices to follow a normal seasonal pattern heading into next year, with fed cattle averaging in the upper to high $90s in the second quarter, seasonally lower in the summer (still 5-8% above 2009) and then back to the upper $90s by the last quarter. In the meantime, they say fed-cattle prices will continue under fire by declines in byproduct values and low pork prices.

LMIC projects feeder steers to average mostly $100-$104 for the second half of this year; except for October, steer calves are expected to average above last year’s fourth quarter.

“If there is adequate rainfall, the number of calves grazing wheat or other pastures this fall and winter could be larger than in recent years,” say LMIC analysts. “That could set the stage for yearling price volatility, especially early in 2010. If placements of cattle into feedlots bunch up, that will translate into fed-cattle price swings, especially next summer.”