Feeder cattle basis stronger in 2009

摘要

After a tumultuous couple of years one thing that is relatively certain in 2009 is that feed grain will be much cheaper than in 2007 and 2008. This will have an impact on cattle prices. Since its peak in 2005-06, the number of cattle on feed has declined dramatically as feed grain prices sent margins into the red. Recently cattle on feed numbers have recovered slightly, but in September 2008 were 30 per cent below the peak.The decline in margins and subsequent decrease in demand forced the price of feeder cattle lower dragging the general young cattle price lower. We like to measure demand for cattle against the Eastern Young Cattle Indicator (EYCI) by calculating the "basis", which is the difference between the physical cattle price in question and the EYCI.