by Andrew Griffith, Livestock Marketing Specialist
September 13, 2024
FED CATTLE
Fed cattle traded steady to $1 lower on a live basis compared to last week. Prices were mainly $180 to $181 on a live basis. Dressed trade was mainly $288 to $290.
The 5-area weighted average prices thru Thursday were $180.72 live, down $0.43 compared to last week and $292.82 dressed, up $5.36 from a week ago. A year ago, prices were $184.26 live and $289.05 dressed.
There was not much week-to-week change in finished cattle prices. This may be considered a win for cattle feeders as margins on current finished cattle sales and feeder cattle purchases may look a little better than a few months ago. The one thing cattle feeders can count on is finished weights continuing to increase through the end of the year as the fall feeding time period tends to be ideal for feed efficiency and packing on the pounds. Thus, heavier weights should generate more revenue if they can hold the price steady. This may be a challenge if history is repeated. Regardless, the complete dynamics of the cattle feeding industry are looking somewhat favorable the next several months.
BEEF CUTOUT
At midday Friday, the Choice cutout was $305.07 down $2.11 from Thursday and down $4.52 from a week ago. The Select cutout was $294.80 down $0.84 from Thursday and down $1.00 from last week. The Choice Select spread was $10.27 compared to $13.79 a week ago.
Based on data from the Bureau of Labor Statistics and analysis performed by the Livestock Marketing Information Center, the annual retail all fresh beef demand index peaked at 126 in 2021 compared to the base year 2000. This is 34 points higher than the weakest demand year in 2010. Since 2021, the index slipped to 123 in 2022 and 120 in 2023. Despite two consecutive years of softening demand, the same cannot be said for 2024. Looking at the quarterly index, first quarter index values peaked in 2022 at 135 before falling to 124 in 2023 and then rebounding to 129 in 2024. In a similar fashion, the second quarter retail all fresh beef index peaked in 2021 at 120, declined to 118 in 2022 and then to 112 in 2023. However, the index rebounded in the second quarter of 2024 and was 118. Nothing can be said for the third and fourth quarter of 2024, but there is reason to believe a rebound from 2023 is in store for the third and fourth quarter. Wholesale and retail prices remain strong and consumers continue to purchase beef items.
OUTLOOK
Based on weekly auction market averages, steer prices were $4 to $8 lower compared to last week while heifer prices were $4 to $8 lower compared to the previous week. Slaughter cow prices were $3 to $6 lower compared to the previous week’s weighted average price while bull prices were $2 to $3 lower compared to the prior week. To call the softer cattle prices the past several weeks a bearish undertone is likely an understatement. Feeder cattle prices have steadily declined for more than two months and now the calf market is taking both a hit from the bearish sentiment in the market and the seasonal price decline that comes in the fall months. One may say it is not yet fall, which is a correct statement. However, cattle markets respond to cattle availability, forage conditions, and feed prices. It would appear cattle availability is strong and forage conditions are weak as many parts of the country are suffering from varying degrees of drought. As the market pushes into October, the freshly weaned calf market will likely see further softening of prices as large temperature swings and dry dusty conditions tend to lead to increased weaning stress and thus a higher probability of respiratory issues. The problem now is that anyone looking to sell cattle through the end of November only have futures and options as a method to manage price risk. This is still a great tool for anyone with 50,000 pounds of feeder cattle, but these are poor alternatives for smaller producers. For those anticipating selling calves from the middle of December and into the new year, LRP is an alternative as it is flexible in the quantity and weight of cattle being covered. The idea of encouraging producers to utilize price risk management tools may be a lesson in treading water, but in an environment of highly volatile prices and when prices are relatively strong, it makes good sense to utilize the resources available. This will largely fall on deaf ears, but if one or two people see the benefits then it may make a great difference in their operations.
ASK ANDREW, TN THINK TANK
When will cattle herd expansion begin? The answers seem to be endless, but they all must coincide. When it starts raining consistently. When calf prices encourage heifer retention. When hay supplies appear sufficient to support carrying more animals. When input prices soften. There are probably more answers and factors that must align to encourage producers to retain more heifers and grow the cattle herd. The traditional thought is that increased profitability generally spurs heifer retention and breeding herd growth, but there are often other factors influencing a producer’s decision including the risk of breeding and calving heifers, land and resource availability, risk of declining cattle prices in the near term, and many other producer specific reasons. At the end of the day, growing the cattle herd is an individual producer decision that is aggregated. Different regions of the country will grow at different rates as conditions become suitable to retain females to grow the breeding herd.
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 –October $177.65 -0.38; December $178.50 -0.10; February $179.60 -0.00; Feeder cattle –September $241.90 -0.15; October $239.13 -0.63; November $235.20 -0.28; January $230.60 -0.40; September corn closed at $3.91 up 5 cents from Thursday