A cattle market that has been strong for months has taken quite a hit. In the past 2 weeks the feeder calf market has dropped about 12 dollars. Eugene Graner with Heartland Investor Services says the feeder cattle market could make a 5-6 dollar recovery if rain arrives on the plain states.
"Potential recovery is there on the feeder cattle side, where the live cattle side is suffering from fiscal cliff hangovers," said Eugene Graner with Heartland Investor Services.
"A lot of corporate parties didn't feature beef or were worried about tax increases, hanging on to their money. So, the bid for the high cut meats wasn't there and the packers are just tired of losing money and so they are actually closing plants."
Graner's concern is if moisture doesn't come to the Kansas area by mid February, the market could drop even harder.
"I am concerned that the best prices for the spring are behind us," Graner said.
"Because we have reality of increasing corn prices as the USDA has come out now that we have tighter stocks than before, so cheap grain is going away and when it comes to drought, when will it break in the plains? If this drought does not show some relief of moisture in the next 30 days, we have a lot of calves that are going to move off of pasture. Instead of April and May they are going to be in March."
Graner says feeder calves were worth about a $1.56 per pound before the market started to slip.