Weekly Livestock Comments for December 13, 2019

– Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee

FED CATTLE: Fed cattle traded steady to $1 higher compared to last week on a live basis. Prices on a live basis were mainly $119 to $120 while dressed prices were mostly $188 to $190.

The 5-area weighted average prices thru Thursday were $118.81 live, down $0.14 from last week and $188.11 dressed, up $0.37 from a week ago. A year ago, prices were $117.00 live and $186.51 dressed.

The strength in live cattle futures provides a little promise that finished cattle could trade over $120 before the end of the year. Whether it does or does not, there is likely to be few complaints from cattle feeders. A few cattle traded at $120 this week, but the weekly weighted average has yet to reach that level. The two thoughts on many cattle feeders’ minds now is avoiding another tough winter like last year and avoiding another market collapse in 2020. It is likely that many feedlots have tried to address the muddy pen situation of 2019 that resulted in many inefficiencies which should be of benefit if another wet winter occurs. Similarly, many feedlots have probably been more proactive in their price risk management strategy to avoid major market loss-es.

BEEF CUTOUT: At midday Friday, the Choice cutout was $217.04 up $1.39 from Thursday and down $8.14 from last Fri-day. The Select cutout was $204.26 up $1.70 from Thursday and down $4.03 from last Friday. The Choice Select spread was $12.78 compared to $16.89 a week ago.

The all fresh beef retail value registered at $5.82 per pound in November which is 4.5 cents higher than the previous month and nearly 12 cents higher than November a year ago. The Choice beef retail value for November was even more impressive as it was over $6.06 per pound which represented more than a 17 cent increase from October and a 15 cent increase from one year ago. The expectation could be for retail value of beef to continue escalating given that wholesale beef prices in November were 7.7 percent higher than the previous month. Another factor that may soon influence retail beef prices is the deal with China that has been announced and that has sent equity markets soaring. It is difficult to fathom that a deal with China will result in a lot of U.S. beef going to China, but it could help clear some pork and poultry stocks which would pull down some of the meat protein stocks. This is a situation that is worthy of beef cattle producers’ attention as it could provide sup-port or continue to weigh on the market.

OUTLOOK: Based on Tennessee weekly auction market price data, steer prices were $3 to $5 higher compared to last week while heifer prices were unevenly steady with a range of $2 lower to $2 higher. Slaughter cow prices were $1 to $2 lower compared to last week while slaughter bull prices were mostly steady. The most notable aspect of the Tennessee weekly auction report is the total number of receipts. Total cattle receipts through reported markets have been extremely strong the past couple of weeks which is somewhat abnormal for December. Many producers that hold onto cattle into December generally hold them until the beginning of the next year since there is generally a bump in prices and for tax reasons. However, producers in Tennessee continue to set wheels under calves, feeder cattle, and slaughter cows. The thought is that receipts next week will be fairly small across the state, but this expectation could be incorrect since most markets will be closed the following two weeks for the end of the year holidays. What makes strong receipts even more puzzling is that soft prices continue to dominate the market. Many cattle producers continue to be disappointed in calf and feeder cattle prices but yet they continue to sell calves. The selloff of animals could be due to resource constraints such as feed availability or having to move one calf crop before the next one begins hitting the ground, but either way, it would appear some producers have put themselves between a rock and a hard place as it relates to marketing cattle. The silver lining in this is that most livestock marketing agencies will be closed the week of Christmas and New Year’s which will provide producers an opportunity to evaluate their situation more thoroughly. At the same time, the break in the action for two weeks will likely have cattle buyers eager to purchase cattle in January which should support calf and feeder cattle prices.