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The Cattle Range Weekly Market Summary contains a fairly comprehensive comparison of the past week's prices from around the country in comparison to the previous week, month, 6 months ago, & 1 year ago.  The data is compiled from a variety of sources and is organized to give producers additional insight in determining market movement and trends. - "Click Here" to Sign Up A Friend or Associate to receive the Weekly Market Summary.
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Now Available on The Cattle Range Mercantile:
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Market Summary for the week ending November 6th:
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The Cattle Range 10-Day Market Trend:
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An indicator of overall cattle market strength.
The angle indicates direction & velocity of the trend.
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The Trendline is based on daily market factors for the past 10 days.
The daily factors are weighted calculations of the cumulative Gain/(Loss)
of 10 major market factors compared to the previous trading day.
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National Feeder & Stocker Cattle Weekly Summary:
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Market Summary & State Averages Unavailable this week.
Sale results for selected Thursday auctions shown below.
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Cattleman's Livestock Auction - Dalhart, TX...
Cattle and Calves: 2,945      Week Ago: 2,424          Year Ago: 2,638
Compared to last week: Feeder steers and heifers under 500 lbs 2.00-4.00 higher, over 500 lbs mostly 2.00 higher, with load lots 4.00 higher.  Slaughter cows mostly 2.00 lower, lean cows up to 4.00 lower.  Trade active.  Demand good.

Cattlemens Livestock Auction - Glenwood, AR...
Receipts:  1289    Last Week:  675    Year Ago:  719
Compared to last week: Slaughter cows and bulls 3.00-4.00 lower. Feeder steer calves under 550 lbs 3.00-4.00 lower, over 550 lbs near steady. Feeder heifers mostly steady.

Farmers & Ranchers Livestock Commission Co. - Salina, KS...
Receipts:  2850       Last Sale: 2366      Year Ago:  2178
Compared to last week:  Steers 300-700 lbs 1.00-9.00 higher, bulk of trade 2.00-5.00 higher; 700-1050 lbs 1.00-6.00 lower. Heifers 350-1000 lbs 1.00-3.00 higher. Receipts: 57 percent (1585) 600 lbs and over, 42 percent (1196) 600 lbs and under; 1 percent (69) slaughter cows. Trade and demand good.

Joplin Regional Stockyards - Joplin, MO...
Receipts:  1300   Last Week:  817   Last Year:  829
Compared to last Wednesday, the bulk of slaughter cows sold 1.00-2.00 lower with some high dressing 3.00 lower and slaughter bulls sold 1.00-2.00 lower. The offering included several herd reductions and dispersals giving a good selection of quality bred cows but cow/calf pairs were scarce. Supply was heavy and demand light to moderate for slaughter classes.

New Cambria Livestock Auction - New Cambria, MO...
Receipts:  1108    Week Ago:  1015    Year Ago:  1218
Compared to last week, feeder steers and heifers steady to 2.00 higher.  Slaughter cows steady.  Demand moderate to good and supply moderate.

Pratt Livestock Auction - Pratt, KS...
Receipts:  1028      Last Week: 1694      Year Ago: 2263
Compared with last week: Steers steady to firm in a light test; heifers steady in a very light test.  Buyers aggressive for reputation offerings.  Slaughter cows weak to 2.00 lower.  Slaughter bulls weak.  Trade and demand moderate.

St. Joseph, MO Stockyards - St. Joseph, MO...
Receipts:  979    Last Week:  1357    Year Ago:  1328
Compared to last week, steer and heifer calves sold 1.00-2.00 higher. Yearling feeder cattle traded fully steady in a light test.  Receipts and producer attendance was light, but order buyers were active and the market could have withstood a much heavier offering, which should be on the way.

Sterling Livestock Commission Co. - Sterling, CO...
Receipts:  2614    Week Ago:  1090    Last Year:  1324
Compared to last week:  steer calves under 600 lbs mostly 3.00 to 4.00 higher, except 400 to 500 lbs 7.00 to 8.00 higher. Steer calves over 600 lbs 3.00 higher.  Heifer calves mostly 4.00 to 5.00 higher. Feeder steers unevenly steady on comparable sales.  Feeder heifers 3.00 higher on comparable sales.  Market activity moderate to active.  Demand moderate to good.

Stockman's Livestock Inc. - Apache, OK...
Receipts:  3410    Last Week:  2504    Year Ago:  2895
Compared to last week:  Feeder steers and heifers steady to 2.00 higher.  Steer and heifer calves 2.00 to 4.00 higher.  Demand good for feeders and calves.  Supply included 49 percent over 600 lbs and 47 percent heifers.

Bassett Livestock Auction - Bassett, NE...
Receipts:  2177    Last Week:  1786    Year Ago:  2800
No recent test for an accurate market comparison. Demand was moderate to good and trade active for a sunny November day. Lower values going for calves with no fall conditioning shots.

Billings Livestock Commission Co. - Billings, MT...
Receipts:  3,443    Last Week:  3,518    Last Year:  1,725
Compared to last week:  Steer and heifer calves sold mostly unevenly steady to 2.00 lower.  Yearling cattle not well tested.  Feeding cows sold mostly unevenly steady to weak, however a higher undertone was noted on Heiferettes to Young cows.  Slaughter cows mostly sold steady to 2.00 lower, except Lean cows which sold 2.00-3.00 lower.  Slaughter bulls sold mostly steady.  Demand moderate to good.

Centennial Livestock Auction Co. - Ft. Collins, CO...
Receipts:  3906    Week Ago:  560    Last Year:  1996
Compared to last week:  steer calves under 600 lbs mostly 3.00 to 4.00 higher. Steer calves 600-700 lbs 1.00 to 2.00 higher.  Heifer calves under 600 lbs 4.00 to 5.00 higher. Heifer calves over 600 lbs no comparable sales to trend.  Feeder steers and heifers no comparable sales to trend due to light sales last week.  Market activity moderate to active.  Demand moderate to good.

Napoleon Livestock Auction Inc. - Napoleon, ND...
Receipts:  2955    Last Week:  1780    Year Ago:  1052
Compared to last week steer calves under 700 lbs sold 1.00 to 2.00 higher.  Heifer calves under 650 lbs sold 1.00 to 2.00 higher.  Yearling feeder steers and heifers not tested due to lack of comparable sales.  Feeder cattle with both spring and fall shots found favor with the buyers.

Presho Livestock Auction - Presho, SD...
Receipts:  5653    Last Week:  300    Year Ago:  na
No trend as no sale in recent with comparable feeder receipts. Numerous potloads and part loads on offer.  Several consignments from previous weeks that was due to rain and muddy roads in the area.

Stockmens Livestock Exchange - Dickinson, ND..
Receipts:  2581    Last Week:  1552    Year Ago:  2097
Compared to last week. Feeder steers traded steady to 2.00 higher. Feeder heifers traded steady. Demand was good.

Valentine Livestock Auction - Valentine, NE...
Receipts:  4407    Last Week:  0    Year Ago:  4650
Compared with two weeks ago steers trended steady. Demand was moderate to good and trade active on mostly black, red, and a few white-face offerings.

Blue Grass South - Stanford KY...
Cattle Receipts: 2772    Last week: 1390
Compared to Monday’s sale, steer calves sold mostly steady with the exception of 5 wgt steers selling up to 5.00 higher.  Heifer calves sold mostly steady.  Yearling steers sold steady to 1.00 lower.  Yearling heifers were not previously tested.  Slaughter cows and slaughter bulls sold mostly steady.

Cullman Livestock Auction - Cullman, AL...
Receipts:  1137    Last Week:  892    Year Ago:  668
Compared to last week slaughter cows 1.00-2.00 lower, slaughter bulls steady to 1.00 lower.  Feeder classes 1.00-3.00 higher.  Replacement cows 25.00 per head higher.

Decatur Stockyards - Decatur, AL...
Receipts:  580    Last Week:  600    Year Ago:  990
Compared to last sale slaughter cows 1.00-2.00 lower, bulls steady. Feeder cattle mostly steady, moderate demand on feeders.

Knoxville Livestock Center - Knoxville, TN...
Cattle Receipts: 1357       Last week: 854         Last year: 1146
Trends: According to the Federal-State Market News Service, compared to the same sale one week ago prices for Slaughter cows: 1.00 to 2.00 lower; Slaughter bulls: 2.00 to 3.00 lower; Feeder steers/bulls: Steady; Feeder heifers: Steady to 2.00 lower.

Ky-Tenn Livestock Market - Guthrie, KY...
Receipts:1838            last week:1408
Compared to last week:Feeder Steers,Steady to 2.00 Higher.Feeder Heifers, 2.00-3.00 Higher.Slaughter Cows 2.00 Higher.Slaughter Bulls,Steady.

Toppenish Livestock - Toppenish, WA...
Receipts: This Week: 2000   Last Week: 1665    Last Year: 1480
Compared to last Thursday at same market, feeder cattle were mixed; weights less than 700 lbs steady to 2.00 higher, over 700 lbs steady to 3.00 lower. Trade active with good demand. Slaughter cows and bulls 2.00-4.00 lower. Trade moderate with light to moderate demand, due to an interest out of the market.
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NCBA Says Study Over Air Quality Measurement Is Flawed:
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The National Cattlemen's Beef Association has criticized a review of the National Ambient Air Quality Standards for Particulate Matter. Conducted by the U.S. Environmental Protection Agency, the study was done as part of a required review of the coarse particulate matter standards. In effect, EPA is looking at the impact of duct. According to a statement from NCBA, coarse particulate matter is "nothing more than dust kicked up by cars and trucks traveling on dirt roads, a tractor tilling a field or cattle moving around on dirt," says Tamara Theis, NCBA's chief environmental council. "Studies do not show that rural dust is a health problem." 

EPA, back in 2006, set a coarse particulate matter standard of 150 micrograms per cubic meter of air, and when reviewing the standard in 2008, determined that the evidence on health effects from this level of dust was inconclusive. However, in July 2009, EPA reinterpreted what NCBA calls "the inconclusive evidence" and made use of what the group calls a flawed study to suggest that there are adverse health effects from dust at leves that are 10 times lower than the current standard.

Theis says EPA is suggesting 12 to 15 micrograms of dust per cubic meter of air, which is below the naturally occurring levels of dust through most Western states - including "pristine National Parks," she says. If EPA were to set air standards at this level, much of the country would be over the limit.

Cattle producers are concerned because it would limit the ability to raise livestock, but the issue goes beyond agriculture, Theis says. "States would be required to impose extreme control requirements and limitations on many businesses to ensure that the standard is met."

The group is urging EPA to reject the study results and refrain from tightening the dust standard further.
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Impact of Rains:
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The Southern US has been inundated with rain over the past two months.  The Mississippi River corridor has been particularly hard hit by the excessive rains.  The chart below shows rainfall as a percent of normal for the 60 days ending on November 2.  Note that in parts of the Mid-South and Southeast, accumulated rainfall over the past 60 days has been as much as four or five times the normal amount.  For row crop producers, this year’s rainfall event has been devastating, seriously degrading both the quantity and quality of crops remaining in the field.  Soybeans and cotton have probably suffered the greatest losses due to the fact that October is generally the principal harvest season for these crops.
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Cattle Buyer Joke of the Week:
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It had been a tough fall for Bart.  It seemed to him that everything had worked against him -- Including the cattle market and his bank.  He was so depressed and destressed that his wife insisted that he seek psychiactric help.  After an initial consultation, he was required to attend a joint session with two other patients.

"To help me determine your state of mind," said the psychiatrist to the group, "I'm going to start by asking each of you to answer a question." 

To the woman in the group, he asked, "What is the opposite of sadness?"
After careful thought, she responded, "That would be joy." 

"And the opposite of depression?" he asked a young man. 
The young man pondered the question and then cautiously replied, "Elation." 

"And you, Sir" the psychiatrist said Bart, "How about the opposite of woe?"
Wanting to exhibit his razor sharp mind, Bart answered decisively, "Any fool knows it's giddy-up."
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Est. Weekly Meat Production Under Federal Inspection:
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Total red meat production under Federal inspection for the week ending Saturday, November 07, 2009 was estimated at 971.6 million lbs. according to the U.S.Department of Agriculture's Marketing Service. This was 1.7 percent lower than a week ago and 1.4 percent higher than a year ago.  Cumulative meat production for the year to date was 2.5 percent lower compared to the previous year.
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Bullish/Bearish Consensus:
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The theory behind the "Bullish/Bearish Consensus" indicator is when the public reaches a consensus, they are usually wrong:
  • They get too bullish after prices have risen, and too bearish after they have already fallen.
Because of this tendency, there are often extremes in opinion right before major changes in trend:
  • When the public reaches a bullish extreme, i.e., a great majority thinks prices will keep rising, then prices often decline instead. 
  • And when they become too bearish, then prices tend to rise.
So when Public Opinion moves above the red dotted line in the chart, it means that compared to other readings over the past year, you're seeing a statistically extreme value.  You also want to look at the absolute level of Opinion, too - if it's at 90%, then there's no question we're seeing an historic level of bullish opinion.  Watch for readings above 80% (or especially 90%) to spot those dangerous times when the public is overly enthusiastic about a commodity.

Conversely, when Public Opinion moves below the green dotted line, then the public is too pessimistic about the commodity's prospects for further gains compared to their opinion over the past year.  Looking for absolute readings under 20% (or especially 10%) often indicates an upturn in the market.
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Economic News:
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  • Orders for U.S. manufactured goods increased a seasonally adjusted 0.9% in September on gains in machinery, autos, defense goods and chemicals, the Commerce Department estimated Tuesday. Factory orders have risen in five of the past six months, but are down 13.9% in the first nine months of 2009 compared with the same period a year ago. September's 0.9% gain was stronger than the 0.6% increase expected by economists. Orders for durable goods increased an upwardly revised 1.4% in September, compared with the 1% gain estimated last week. Orders and shipments for nondurable goods increased 0.6%. Inventories fell 1%, the 13th consecutive decline.

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  • The U.S. unemployment rate climbed to 10.2% in October, topping the 10% mark for the first time in 26 years, the Labor Department reported Friday. Nonfarm payrolls dropped by 190,000 in October, bringing to total number of jobs lost in the recession to 7.3 million. Economists were forecasting a rise in the unemployment rate to 10%, with 150,000 lost payroll jobs. The unemployment rate of 10.2% was the highest since April 1983. An alternative gauge of unemployment, which includes discouraged workers and those forced to work part-time, rose to 17.5%, the highest on record dating to 1995.

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  • Gold futures rose to a new record high of $1,100 an ounce Friday after data showed the U.S. unemployment rate topped 10% in October, raising the metal's appeal as a safe asset. Gold for November delivery gained 1% to $1,100 an ounce on the Comex division of the New York Mercantile Exchange, the highest level for a front-month contract. The more actively traded December contract rose to $1,101.90 an ounce.
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Cattle Outlook:
Glenn Grimes & Ron Plain - University of Missouri
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Beef production for January-September was down 3.2 percent. The number of cattle slaughtered during this nine month period was down 4.2 percent. Therefore, cattle weights were one percent heavier than for this time in 2008. 

Due to smaller exports beef consumption per capita was only down 2.7 percent for January-September 2009 compared to 12 months earlier. 

Beef demand at the consumer level was down 2.3 percent, pork demand at consumer level was up four percent, broiler demand at the consumer level was down 2.9 percent and turkey demand at the consumer level was up 2.9 percent for January-September compared to a year earlier. 

Live fed cattle demand was sharply below a year earlier with a loss of 8.5 percent from 12 months earlier. The reason why live fed cattle demand was down much more than consumer demand was less exports and a very weak hotel and restaurant trade.
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Looking Ahead:
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  • During the next 5 days (November 4-8), a warming trend will occur over much of the United States, centered over the High Plains.  Temperatures should be 6-12 degrees Fahrenheit above normal, with the greatest departures over Nebraska and South Dakota.  Precipitation chances look to be greatest over the Great Lakes and Upper Midwest and along the coast of the Pacific Northwest.  Precipitation chances also look good over portions of the Gulf Coast and portions of south Florida. 
  • The Climate Prediction Center 6-10 day forecast (November 9-13) temperatures continue to be well above normal over the eastern half of the United States, with the warmest temperatures centered over the Great Lakes.  Below-normal temperatures are anticipated over California, Nevada and Alaska during this time.  Precipitation chances are projected to be greatest over the Plains and Mississippi Valley and Pacific Northwest.  The western portions of Alaska should have above-normal precipitation as well. 
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Representative Sales of Cow & Pairs - This Week:
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  • Sale Results Unavailable
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Representative Sales of Cow & Pairs - Last Week
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  • El Reno, OK
    • Bred Cows:  Medium and Large 1-2  2-6 yrs 1000-1350 lbs 2-7 months 595.00-720.00; 5-8 yrs 1100-1300 lbs 4-8 months 690.00-800.00; 5-8 yrs 1100-1350 lbs 3-8 months 560.00-600.00. 
    • Pairs:  Medium and Large 2  2 yrs 1000-1100 lbs w/125-170 lb calves 835.00-885.00; 3-5 yrs 900-1100 lbs w/90-150 lb calves 540.00-630.00;  5 yrs 800-1000 lbs w/60-125 lb calves 640.00-790.00. 
  • Woodward, OK
    • Bred Cows:  Medium and Large 2  2-7 yrs 950-1375 lbs 2-7 months 700.00-820.00; 5-10 yrs 1050-1225 lbs 2-5 months 510.00-620.00.
  • Joplin, MO
    • Bred Cows:  Medium and Large 1-2  2 yrs to short and solid mouth 2nd-3rd stage 950-1360 lbs 650.00-850.00, few blk/blkwht face 950.00-1075.00, 1st stage 1050-1300 lbs 550.00-760.00; short and solid mouth to aged 2nd-3rd stage 1100-1310 lbs 495.00-680.00.  Large 1-2  5-6 yrs 2nd-3rd stage 1400-1510 lbs 750.00-925.00.  Medium 1-2  4 yrs to short and solid mouth 2nd-3rd stage 975-1025 lbs 475.00-610.00; broken mouth to aged 3rd stage 1000-1020 lbs 460.00-500.00. 
    • Pairs:  Medium and Large 1-2  2 yrs to short and solid mouth 1080-1340 lbs w/baby to 375 lb calves 900.00-1125.00; short and solid mouth to aged 1095-1200 lbs w/baby to 265 lb calves 610.00-775.00. Medium and Large 2  4-6 yrs 950-1070 lbs w/baby to 235 lb calves 725.00-775.00.
  • Springfield, MO
    • Bred Cows:  Medium and Large 1-2  4-7 yrs 2nd-3rd stage 1110-1325 lbs 610.00-760.00, 1st stage 1045-1305 lbs 550.00-750.00; short and solid mouth to aged 2nd-3rd stage 1070-1265 lbs 575.00-610.00.  Medium and Large 2  4 yrs to short and solid mouth 2nd-3rd stage 1005-1320 lbs 510.00-635.00.  Medium 1-2  7 yrs to short and solid mouth 2nd-3rd stage 985-1060 lbs 480.00-610.00. 
    • Pairs:  Medium and Large 1-2  5-7 yrs 1200-1375 lbs w/baby to 220 lb calves 810.00-1010.00; short and solid mouth to aged 1085-1370 lbs w/baby to 260 lb calves 675.00-750.00. 
  • West Plains, MO
    • Bred Cows:  Medium and Large 1-2  3-7 yrs 1085-1135 lbs 2nd-3rd stage 740.00-840.00, few 2-7 yrs 930-1335 lbs 2nd-3rd stage 620.00-750.00; 7 yrs to mostly short-solid mouth 1075-1350 lbs 2nd-3rd stage 520.00-650.00 per head, several 900-1100 lbs 1st-2nd stage 510.00-590.00.  Broken mouth (aged) 1025-1225 lbs 2nd-3rd stage 440.00-540.00. 
    • Pairs:  Medium and Large 1-2 few scattered single pairs 5 yrs to short-solid 850-1400 lbs w/ baby to 350 lb calves 820.00-890.00; few short-solid and broken-mouth 850-950 lbs w/baby to 350 lb calves 640.00-670.00.
  • Amarillo, TX
    • Bred Cows:  Medium and Large 1-2 young to middle aged 1000-1250 lbs 3-5 months 800.00-840.00; young to middle aged 1050-1300 lbs 5-8 months 890.00-990.00; middle age to aged 1100-1200 lbs 3-4 months 650.00; middle age to aged 1000-1100 lbs 5-8 months 740.00-810.00.  Medium and Large 2 young 950-1200 lbs 3-5 months 560.00-720.00; middle aged 950-1200 lbs 5-7 months 550.00-790.00; middle aged to aged 900-1100 lbs 5-6 months 480.00-490.00; middle aged to aged 900-1200 lbs 6-8 months 550.00-660.00. 
    • Pairs:  Medium and Large 1-2 young to middle aged 900-1200 lbs w/150-300 lb calves 810.00-1010.00; middle aged to aged 850-1100 lbs w/150-250 lb calves 550.00-780.00.
  • Crockett, TX
    • Bred Cows:  Medium and Large 1-2 young 870-1175 lbs 3-6 months 710.00-800.00; middle aged 925-1490 lbs 4-8 months 700.00-870.000, fancy 1045-1490 lbs 5-6 months 890.00-900.00; aged 910-1600 lbs 5-8 months 570.00-660.00. 
    • Pairs:  Medium and Large 1-2 middle aged 1065-1350 lbs w/200-480 lb calves 800.00-940.00.
  • Valentine, NE
    • Bred Cows:  Medium and Large 1 young 950-1500 lbs 2nd-3rd stage 625.00-885.00, few up to 1035.00; middle aged 1100-1400 lbs 2nd-3rd stage 635.00-830.00; aged 975-1580 lbs 2nd-3rd stage 440.00-735.00. 
    • Pairs:  Medium and large 1 middle aged 1300-1600 lbs w/baby to 350 calves 950.00-1150.00, few up to 1375.00; aged 900-1600 lbs w/baby to 300 lb calves 650.00-940.00.
  • Southeast
    • Bred Cows:  Medium and Large 1-2  3-7 yrs 850-1250 lbs 2nd-3rd 625.00-875.00; 8-10 yrs 850-1200 lbs 2nd-3rd stage 500.00-700.00. 
    • Pairs: Medium and Large 1-2  3-7 yrs 800-1200 lbs w/100-200 lb calves 725.00-850.00; w/200-300 lb calves 825.00-925.00, few to 1085.00.  Small and Medium 1-2  5-10 yrs 750-950 lbs w/100-200 lb calves 525.00-625.00, few down to 350.00.
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Feedyard Closeouts:
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  • Typical closeout for steers sold this week: ($32.08)
  • TCR's Projected Profit/(Loss) based on the futures when Placed on Feed: ($54.79)
  • TCR's Projected closeout for steers placed on feed this week: ($12.01)
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Slaughter Cattle:
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Negotiated cash trade was limited on light demand in all feeding regions Friday. Not enough sales to establish an adequate market trend. On Thursday live sales sold from 87.00 to 87.50 in Kansas and dressed sales at 140.00. In Nebraska live sales sold from 85.00 to 86.00 and dressed sales at 134.00. In Colorado live sales sold at 85.00. In the Western Cornbelt live sales sold at 84.00 and dressed sales at 134.00. Last week in the Texas Panhandle live sales sold from 87.00 to 88.00.

The average live weight of cattle slaughtered in the Texas Panhandle for the week ending 10-31-2009 was 1275 lbs with 42 percent heifers compared to 1281 lbs and 41 percent heifers the previous week and 1281 lbs and 38 percent heifers the same week a year ago.
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Market Overview:
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Packers picked along all week on offerings at steady money and on Friday did nothing. Margins prevented increasing the bids and next week will have to bring the resolution. The market closed the week with $87 paid in the north, $87.50 in Kansas and a few early sales at $88 in Texas. Next week will feature larger slow lists and close bought packer inventories. 

Box prices were soft at week's end. Some improvement in exports caused by a weak dollar might stimulate beef demand between now and the end of the year. Choice cuts were quoted at $141 and select at $135 for a $6 spread. 

Feedlots pulled bids and will reevaluate pricing on feeder cattle over the weekend in light of the crashing futures. A 750# steer was quoted at $94 in the southern plains. 
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Money Managers Are Introduced to Contango*
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With the government printing money as fast as the presses will run, it seemed apparent to most money managers the inevitable outcome. Throwing money, as a solution to every problem faced by a complex economy, will simply devalue the money. The result will be inflation and few argue this point. One way for the money managers to combat this likely scenario is create funds, both speculative and indexed, to purchase commodities. Commodities are generally a safe haven for dollars trying to avoid the ravaging effect of inflation. 

Following last years economic crisis, there emerged many funds allowing investors to participate, in one form or another, in inflation protected funds. When commodity prices start to climb, it's often a sign that inflation will pick up in the months ahead. This allows investors to participate by purchasing commodity price indexes, which are essentially baskets of contract prices for future delivery of oil, metals, livestock, and other goods. Goldman Sachs has managed the largest of these funds for years and they have been popular with corporations interested in laying off the risk of rising prices. 

Investments into these funds skyrocketed as savvy investors sought a path to participate in the government runaway inflation train. But as will happen, things didn't work out like expected. The futures prices of the deferred contracts on commodities already carried large premiums to the current cash prices -- called Contango. Every time a fund purchased the futures, they set a benchmark too far above the current prices to allow them a profit. During the summer months, natural gas was selling for $2.80 a thousand BTU. December futures were trading for $5.50 almost double the price. Investors in funds with a basket of futures including natural gas found themselves locked into a loser when natural gas prices rose from $2.80 to $4.50 but they were in at $5.50. 

Investors interested in playing the meats can purchase an index fund called COW. The fund managers simply purchase deferred contracts of cattle and pork contracts to offset the new money rolling into the funds. Many of those purchases last summer put the investor into cattle contracts for October and December above $90. These were large premiums to the cash and as time clicked off, the Contango sunk the ship. 

Many of the funds and investors in those funds are learning about Contango the hard way. Many investors believed they were purchasing funds with positions at the low cash prices that existed when they bought. As investors and speculators took a hit, they have started to pull out of the funds. The WSJ reported last week that on a quarterly basis, inflows into commodity investments have fallen from about $22 billion in the first quarter to $17 billion in the second and $11 billion in the third.

Many of the funds have also found they are too big for the market. Traders in cattle futures have watched with amazement as funds move in and out of the market moving futures dollars on days when little fundamental changes are known by the market. One needs to only look at the volumes in cattle contracts to see the impact of $50 million dollars, bet long or short, on the market. 

One of the great puzzles of the past two years has been the resilience of feeder prices in light of the large losses in cattle feeding. Probably the most reasonable explanation would be the index and speculative longs that have propped up the deferred months in the live cattle contracts. We might be seeing less of them in the future.

*Contango is a term used in the futures market to describe an upward sloping forward curve (as in the normal yield curve). Such a forward curve is said to be "in contango." Formally, it is the situation where, and the amount by which, the price of a commodity for future delivery is higher than the spot price, or a far future delivery price higher than a nearer future delivery.
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National Grain Summary:
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For the Week: Grain and soybean bids were lower again due to favorable weather.  The weather looks dry into the weekend allowing wheat planting and harvest to advance.  There is rain in the forecast for next week.  The lower energy markets also contributed to the losses posted in corn and soybeans.

Corn prices fell after the recent rally in which hedge funds pushed the December contract back over $4.  Warm open weather may allow the harvest to be completed without additional interference and the crop is big.  Corn is now trading a 35 cent premium basis to the September contract in the southern plains. A large spread is developing north of the Canadian River compared to south. Southern plains feeders are paying premiums until the northern harvest is completed and repeater trains resume normal trade.  Corn is now pricing into most rations at $7.60 cwt.
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Although the information contained in this Market Summary is from sources believed to be accurate and timely, THE CATTLE RANGE EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESSED OR IMPLIED, AS TO THE ACCURACY OF ANY OF THE CONTENT PROVIDED, OR AS TO THE FITNESS OF THE INFORMATION FOR ANY PURPOSE.
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