by Andrew Griffith, Livestock Marketing Specialist
December 20, 2024
FED CATTLE
Fed cattle traded steady to $1 higher on a live basis compared to last week. Prices were mainly $194 to $196 on a live basis. Dressed trade was mainly $305 to $307.
The 5-area weighted average prices thru Thursday were $194.93 live, up $0.62 compared to last week and $305.67 dressed, up $2.27 from a week ago. A year ago, prices were $170.13 live and $270.07 dressed.
Prices in the South are lagging behind cattle prices in the North. Much of the trade in the South took place around $191 this week on a live basis while prices in the North were $3 to $5 higher. Part of this is due to grading expectations, but the market is heading into a time period where end meats will be the focus. That being said, there is very little price difference in between a Prime grade and a Select grade end meat primal. In more general terms, there is little difference in the price of roasts based on quality grade. One may expect the discount in the South to tighten over the next couple of months, but it will widen once again when the spring grilling season takes control.
BEEF CUTOUT
At midday Friday, the Choice cutout was $316.27 down $4.42 from Thursday and up $0.37 from a week ago. The Select cutout was $283.56 down $0.55 from Thursday and up $0.71 from last week. The Choice Select spread was $32.71 compared to $33.05 a week ago.
There was some positive movement in the Choice cutout this week as some entities were forced to make some extremely last-minute purchases. However, this strength was short lived as week-over-week gains were modest. The market will soon be moving from the rib primal to end cuts coming from the chuck and round. There should be more interest in the brisket moving through the winter months as well. The brisket was a leader of the cutout in the last quarter of 2021 and the first quarter of 2022. From November 2021 through February 2022 the price of the brisket primal relative to the comprehensive Choice cutout price was 90 to 110 percent. For example, if the Choice cutout was $200 then the brisket primal ranged from $180 to $220 during that time period. In 2024, the brisket has had an average value of 82 percent of the Choice cutout. The packer as well as cattle producers need consumers to push briskets higher. They will certainly increase moving into January, but market participants need them to move into the 2021 and 2022 winter range.
OUTLOOK
Based on weekly auction market averages, steer prices were $4 to $8 higher compared to last week while heifer prices were $2 to $6 higher compared to the previous week. Slaughter cow prices were steady to $2 lower compared to the previous week’s weighted average price while bull prices were steady compared to the prior week. Calf and feeder cattle markets at local auctions finished the year on a strong note. This was not ending the year on a strong week but rather several strong weeks to finish the 2024 cattle marketing year. Feeder cattle futures contracts did not share the same price trend movement this week as the cash markets for calves and feeder cattle locally, but the January contract is $30 per hundredweight higher than its low the first week of September and $13 to $15 higher than the first week of November. Pushing the feeder cattle market $13 per hundredweight in either direction over a six to seven-week period is no small task. However, that is exactly has happened with the CME feeder cattle index. Similar types of price movements have become more common the past few years, but they are just as surprising today as they were yesterday. From the local price standpoint, 550-pound steer prices are nearing the $300 per hundredweight mark, which equates to $1,650 per head. This is good for the cow-calf producer and less exciting for the buyer, but with the CME feeder cattle index near $262, an 800-pound steer worth nearly $2,100 per head. The current pricing opportunities provide an opportunity for a profit for the cow-calf producer and a positive margin for the stocker and backgrounding operators. The challenge here is that feeder cattle futures are trading at a discount compared to the CME feeder cattle index. The reason this is a challenge is because the cash price and futures prices are expected to converge. If a person is hedging then it is difficult to know how such a convergence would occur. This is important in that a hedged position could influence profits a great degree.
The December cattle on feed report for feedlots with a 1000 head or more capacity indicated cattle and calves on feed as of December 1, 2024 totaled 11.98 million head, down 0.3% compared to a year ago, with the pre-report estimate average expecting a decrease of 0.1%. November placements in feedlots totaled 1.80 million head, down 3.7% from a year ago with the pre-report estimate average expecting placements down 4.1%. November marketing’s totaled 1.73 million head down 1.5% from 2023 with pre-report estimates expecting marketings down 1.8%. Placements on feed by weight: under 700 pounds down 5.7%, 700 to 899 pounds down 2.8%, 900 pounds and over up 2.2%.
ASK ANDREW, TN THINK TANK
There were a couple of questions this week concerning breeds of cattle for an operation and one of those questions also included what sector of the cattle business to be in. When it comes to selecting a primary breed for a commercial cow-calf herd or for a seedstock business, it is important to know the goals of the operation other than “maximize profits.” There are people that will say there is as much variation within a breed as across breeds. The truthfulness of this statement is largely dependent on how comparisons are made. The first thing a producer should identify is their intended market whether that be selling weaned calves straight off the cow, selling cuts of beef, or anything between the two. There are good cattle in most breeds to achieve any of these objectives. The challenge is that some breeds may not excel in certain areas, which will require more effort to identify those animals. The second aspect a producer should consider is choosing a breed or multiple breeds they will enjoy looking at every day.
Please send questions and comments to agriff14@utk.edu.
FRIDAY’S FUTURES MARKET CLOSING PRICES
Friday’s closing prices were as follows: Live/fed cattle –December $191.33 +0.98; February $188.40 +1.85; April $190.13 +1.53; Feeder cattle –January $255.60 +1.13; March $255.83 +1.25; April $256.75 +1.30; May $256.80 +1.28; March corn closed at $4.46 up 6 cents from Thursday.