It's been an incredible year for feeder cattle sales. Since mostly recovering from the equity market meltdown early in August, the feeder cattle complex seems to indicate it has more in store for cattlemen as time treks through the fourth quarter of 2024.

So far this week, the feeder cattle market has been mixed. On Monday the market closed lower, but on Tuesday the spot January feeder cattle contract was able to close above its 100-day moving average, which signals substantial technical support and overall bullishness.

So, what's driving this strong, bullish market undertone?

I believe the three main factors aiding in the market's current momentum are feed prices are cheap, buyers know supplies of feeders are going to be thin next spring, and the Fed's recent decision to cut interest rates has helped with overall market morale.

Even though the most recent U.S. Drought Monitor map showed that the vast majority of the continental 48 states are in some degree of drought, hay production was plentiful this year and corn prices are cheap. Monitoring the amount of moisture accumulated this fall through next spring will be imperative, but from a feeder cattle buyer's perspective, it's more feasible to buy feeders now and put cheap feed in front of them as opposed to buying more expensive cattle next spring.

This highlights the next point: It is likely that feeder cattle supplies in 2025 will be even tighter than they are in 2024.

In January, we will see the USDA release the US Cattle Inventory Report which will give us a better understanding of what the beef cowherd did throughout the year.

But from a ground-level perspective, I personally don't believe that most producers were in growth mode, which will consequently affect the 2025 calf crop. And as buyers manage feeder cattle moving in and out of their yards, they have made a mental note that supplies could inherently thin next spring.

Lastly, just a little over a month ago, the Federal Reserve announced it had lowered its benchmark federal funds interest rate by half a percentage point to a range between 4.75% and 5%. (https://www.dtnpf.com/…). This was the first rate cut since March 2020. Interest rates have been a limiting factor for the cattle complex as the cost of borrowing money has simply been too expensive for most operations. Although most operators wish that interest rates were still cheaper, the Fed's announcement helped spark some bullishness throughout the equity and commodity markets and gave producers hope that borrowing money may be more feasible again soon.

If you want to track feeder cattle prices in your region, I highly recommend following the USDA's National Weekly Feeder and Stock Cattle Summary. It's a nice weekly visual representation of feeder cattle prices throughout the U.S. that compares on a weekly basis, as well as to a year ago. You can access it here: https://usda.library.cornell.edu/…

In conclusion, cattlemen are empowered in today's feeder cattle market as they have options. Prices are currently strong, and the market seems to indicate that prices could get even stronger. But, as always, it would be remiss of me not to mention that betting on prices always comes with some risk -- and risk can be costly.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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