AG SERVICES
201 Innsdale Terrace, Clovis, New Mexico
505-769-3300(March 16, 2000) FEEDER CATTLE: Cash feeders have basically been in a holding pattern over the last few weeks. Prices actually topped in January and have since been drifting lower while making new lows on each decline and lower highs during each rally. There still doesn't seem to be lots of buying interest? On the other hand, very light selling interest at these levels has this market in a "waiting and see" mode? Grain prices have had little influence on price direction until this week, but higher fed cattle prices have lent the majority of support for the time being. The seasonal tendency is for feeder prices to top during the January/February time frame and then decline into late May/early June before rebounding back higher into the August/September time frames. There will always be times when the feeder/live cattle spreads will hold unusually large spreads, but we are currently looking for this spread to narrow over the next 60-90 days to a level which should attract cattle feeders back into the market. It's one thing to bet on the come, it's another thing to continue to buy feeders at these levels only to require major moves up in the live cattle prices in order to break-even? It is our belief that while few may actually take such a huge risk and many large cattle feeders are actually going to the sidelines until a profitable situation develops? If this situation does not develop, then there may be some volatile situations in coming months. There will always be cattle on feed, but many of these cattle may be owned by larger corporations and investors with much deeper pockets than the average individual cattle feeder? For now, we'll look for lower prices.
SHORT-TERM TRENDS--Sideways to lower.
LONG-TERM TRENDS--Sideways to lower?
Bryon Fillpot
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