We believe there is hope of better prices to come in the fourth quarter and first quarter of next year based on USDA projections but a couple of things have to happen. We've noticed over the last few weeks that producers are holding cattle for higher money. This phenomenon is a common occurrence and rarely works. In our experience, what generally happens is the cattle get larger and the price goes down.

Right now the front end supplies are loaded with extremely heavy weight cattle that need to be sold and gotten rid of. We would like to think that when feed costs get high enough that producers would market cattle when they are finished and not hold them back. If that occurs and weight start to come down, we will likely see price begin to increase.

You've heard this song before - "Keep the showlist cleaned up and prices will rise." That song is probably as old as cattle feeding and is true today just as it was true decades ago.

The chart demonstrates how bad it's been. Since March of 2001, producers have lost in excess of three billion dollars according to USDA statistics. Granted the picture is grim, as the last 14 months have not provided much of a profit to producers on average. We'd like to stress that this data is based on "average" assumptions but would probably come pretty close to the losses incurred. Even this chart shows promise since after a period of losses comes a period of profitability. Perhaps the fourth quarter will be the start of better things to come. Even this months cattle on feed report was extremely bullish as placements were 102 percent of last year and the average trade guess was almost 111 percent. Marketing's came in at 102 and the guess was 101. Total cattle on feed was 95 percent of a year ago. All in all this report should begin the next leg higher. ©

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