background or sell

[max]

What are your opinions on whether to background 550 wght strs and 500 wghts hfrs or just take the money and run?

[grassfarmer]

I tend to go on gut instinct in these things and my plan was to carry mine through until Feb at least. I'm a contrarian and have the feed on hand.

Then I read a market analysis by Gerald Klassen in Cattlemen that had some interesting facts in it that i'll sumarize here.
According to predictions the CDN calf crop is down only about 2% on the year, the US one down by only 0.5% - way smaller reduction than most of us perceive. But - feedlot placements are the story particularly in the US - Drought in Texas through Oklahoma put US feedlot placements Jan-July this year almost as high as total placements last year. Potentially placements Jan-March 2012 could be down 12-15%. Historically 8-10% drops in feeder placements increases fed and feeder cattle prices by 3-5%.
Imported DDGS are trading at a $10-$15 discount to barley so this will limit upside potential on barley. Feedlots have locked in some fed cattle prices in excess of $120 for late winter and first quarter beef production will be down on the year.
So in conclusion his prediction is - lower numbers of cattle going forward, bearish outlook for feed barley, potential for good fed cattle prices in spring = good potential for higher feeder cattle prices in the spring.

Of course that is only one guys prediction but I was kind of happy to read some facts that kind of supported my gut instinct.

[burnt]

I'm with GF on this one and plan to keep mine until into the New Year. But it's not an easy decision when earlier-born calves are bringing almost one thousand bucks. The light end always stays home anyway.

Backgrounding has paid handsomely the past few years but one of these times it'll bite back.

[max]

Traditonally we have backgrounded all of our calves and the marketed them jan thru april. My gut also tells me to continue with that but question whether the market will dip down, I dont see an all out crash but world matters affect us more and more everyday.