by Andrew Griffith, Livestock Marketing Specialist
January 31, 2025
FED CATTLE
Fed cattle traded $5 to $6 higher on a live basis compared to last week. Prices were mainly $208 to $210 on a live basis. Dressed trade was mainly $329 to $330.
The 5-area weighted average prices thru Thursday were $209.36 live, up $5.22 compared to last week and $329.24 dressed, up $7.09 from a week ago. A year ago, prices were $177.74 live and $279.43 dressed.
Finished cattle prices continue to push higher to round out the first month of the year, and they continue to trade with a strong basis relative to the February live cattle contract. Live cattle futures appear to be out of sync with seasonal tendencies as the February contract is not only trading at a discount to cash prices but is trading at a $3 premium relative to the April contract and more than an $8 premium to the June contract. It is difficult to find support for the inverted market given cattle on feed numbers, which may mean traders are afraid to push price expectations higher in deferred months. Traders may simply be waiting to see how factors outside the industry influence the market.
BEEF CUTOUT
At midday Friday, the Choice cutout was $327.56 up $0.08 from Thursday and down $1.21 from a week ago. The Select cutout was $316.25 up $0.35 from Thursday and up $0.12 from a week ago. The Choice Select spread was $11.31 compared to $12.64 a week ago.
Beef prices have changed dramatically over the past decade on a nominal dollar basis, but how have they changed from a real dollar basis as one considers how inflation has been a contributor to higher prices? Regardless if the focus is on wholesale beef price or retail beef prices, the story is similar. Thus, how have retail beef prices changed over the past several years? Using the Consumer Price Index for meat to adjust the nominal dollar value of 100 percent ground beef, there does not appear to be much change in price from 2014 to the end of 2024. The price of 100 percent ground beef at the end of 2024 was at its highest level when considering the past 11 years, but it was only 10 cents per pound higher than the same product in December 2014 when adjusted to real dollars. This compares to a nominal dollar value difference from December 2014 to December 2024 of $1.45 per pound. The beef market has strengthened marginally over the past decade, but it is far from what it appears since infusion of dollars by printing more money has contributed to inflation.
OUTLOOK
Based on Tennessee weekly auction average prices, steer prices were $7 to $12 higher this week compared to last week while heifer prices were $6 to $11 higher than the prior week. Slaughter cow prices were mostly steady compared to the previous week while slaughter bull prices were also mostly steady compared to last week’s prices. Instead of talking about generalities in the market, sometimes it is beneficial to speak to some specifics that were seen across auctions. The first observation was the quantity of animals that made their way through auction markets in Tennessee this week. There were five markets that traded 1,600 head or more with three of those markets trading more than 2,000 head this week. Given that Saturday sales had not occurred at the time of this writing, it would appear more than 12,000 head will have been traded this week in Tennessee reported auctions. Beyond the quantity of animals being traded, there were some market prices that should be noted. For instance, slaughter cow and bull prices were variable across different auctions with some auctions experiencing strong week-over-week gains in slaughter cow and bull prices while other auctions saw declining prices for this class of animal. The price for these classes of animals is expected to strengthen moving into spring and early summer. Another market price observation was the strength in some load lot prices. For instance, a load of all black steers weighing 896 pounds traded for $264.25 per hundredweight or $2,368 per head while two loads of all black steers weighing 643 pounds sold for $323.75 per hundredweight or $2,082 per head. This brings the conversation to grass cattle price strength that typically occurs in late February and through March. Can the market continue to push prices higher, or will there be resistance at some price point? Seasonal tendencies tend to dominate, which is why they are seasonal tendencies. However, it would appear outside factors could play a larger role in markets this year as President Trump’s administration makes waves.
ASK ANDREW, TN THINK TANK
A young gentleman who is starting a cattle operation has emailed and asked several questions the past couple of weeks ranging from production to marketing. Some questions have been rather basic while others have been more advanced questions. I appreciate a person’s willingness and eagerness to ask and seek information in order to improve the probability of being successful in anything. The reason I can appreciate this approach is because I tend to have these same tendencies with endeavors I evaluate and pursue. The question in my mind is why are there people who are timid about asking questions? If something is learned, it does not have to be used, but something not known or learned is not easily utilized. At the same time, I wonder why some people ask a question or two and then they stop as if they have learned everything they need to know. It makes me think of a parent asking a child “What did you learn at school today?”, and the child answering “Evidently not enough. I have to go back tomorrow.”
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 –February $204.60 +0.13; April $202.30 +0.80; June $196.70 +0.93; Feeder cattle –March $275.73 +2.53; April $275.13 +2.80; May $273.13 +2.83; August $273.90 +2.48; March corn closed at $4.82 down 8 cents from Thursday.