A major weather event in the Great Plains has triggered a wave of demand for feeders. Heavy and highly beneficial rains have fallen in the Southern Plains, with much more in the forecast. The entire Great Plains and Corn Belt are forecast to see above-normal rainfall during most of November.

With receipts of feeders declining at auction barns, the scramble for animals has driven feeder prices sharply higher. Everyone has wheat to graze, and there aren’t enough animals.

Feeder futures surged higher and penetrated the October highs. Live cattle futures remain more than 300 points off the October highs, but it appears that the market has completed a downward correction against the uptrend.

The live cattle futures market, doing what it’s designed to do, appears to be anticipating a sharp decline in placements in the months ahead. The November “Cattle on Feed” report, scheduled for release Nov. 22, is expected to show large placements of cattle into the feedlots during October. The average estimate is for placements to be up just over 3% from last year. Basically, this report is expected to show larger placements than marketings, pushing on-feed inventory to 11.9 million, up from 11.6 million in the previous month.

We’ve known all year that we’re dealing with the smallest calf crop in history. However, packers have prevented a tight fed cattle supply situation from developing by cherry picking the show list and slowing chain speed. This has helped to prevent a plunge in wholesale beef prices and allowed cattle to gain weight, resulting in record-heavy cattle weights for most of the year.

Related:Seasonally active weather pattern continues

The slower marketings have kept on-feed inventory close to year-ago levels. The short supply of fed cattle that was widely expected never developed this year. The market is now expecting a shortage to develop next year.

The previous 38 years of my brokerage/analyst career I was taught that heavyweight cattle, over an extended period, were never bullish toward cattle prices. This tidbit of knowledge has served me well until this year. While difficult, it’s time to “unlearn” this concept. Heavy weights are not seen as a bearish fundamental factor approaching 2025. It’s seen as one of the last tools in the packer toolbox to utilize in an attempt to keep cash steer prices from jumping higher. Yes, it appears that packers are out of tools, and this market is about to get away from them.

The tight supply will be enhanced if the industry decides to begin holding back heifers for breeding. So far, there is no evidence this has started in 2024. When it does start, placements, hampered by the smallest calf crop, in history will be whittled down further as cow/calf guys hold back heifers for breeding. This creates what is called the “bullish whiplash effect,” forcing fed supplies ever tighter and prices higher to sharply higher. This appears highly likely to happen in 2025.

Related:Nevil Speer is back as a contributor for BEEF, Feedstuffs

My concern about inflation-wary consumers and their inability and unwillingness to pay for expensive beef is a legitimate concern. This was proven in the recent Presidential election as people voted with their wallets. The inflation era of the Biden Administration has hurt the average consumer. This is unlikely to change. However, in the case of beef, production is likely to drop so severely that beef will become a luxury item. Prices will rise very high to ration the tight supply. That’s how markets function.

Beef, both in the domestic market and in the export market, will go to the highest bidder. No one knows how high prices will go to ration the supply. All-time high beef prices and cash steer prices are very likely over the next 12 months. There was a major seasonal low in futures due in early December. It appears to have occurred about two weeks early. The next major seasonal high is due in the third week of February.

Related:What the three Ps say about 2025 beef cow inventories

Dennis publishes the evening livestock wire daily for clients and subscribers. For a free 30- day trial, send an email request to [email protected].