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Based on Tennessee price data, 500 to 600 pound steer prices decline five percent on average from August to November which would result in prices declining about $7 per hundredweight in today’s market which equates to about $40 per head. Similarly, 700 to 800 pound steer prices decline six percent on average from August to November which would mean nearly an $8 per hundredweight decline in prices over the next few months. Given that feeder cattle futures are not pricing in any price decline over the next three months and the seasonal tendency is for cattle prices to decline, producers have a decision to make on market pricing. Most producers will ride the market out until time of marketing which will likely result in receiving a lower price if the seasonal tendency holds. Other producers may take advantage of today’s market price and either hedge fourth quarter marketings or sell cattle using a forward contract with an October or November delivery. The risk that remains is the potential for prices to move higher, but the likelihood of prices moving higher is relatively small. The August cattle on feed report for feedlots with a 1000 head or more capacity indicated cattle and calves on feed as of August 1, 2018 totaled 11.09 million head, up 4.6% compared to a year ago, with the pre-report estimate average expecting an increase of 4.4%. July placements in feedlots totaled 1.74 million head, up 7.9% from a year ago with the pre-report estimate average expecting placements up 5.5%. July marketing’s totaled 1.87 million head up 5.0% from 2017 with pre-report estimates expecting marketings up 4.9%. Placements on feed by weight: under 800 pounds up 13.8%, 800 to 999 pounds down 3.2%, and 1000 pounds and over up 13.3%.
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