– Josh Maples, Assistant Professor & Extension Economist, Department of Agricultural Economics, Mississippi State University
James, Kenny, and I got together again last week to record another quarterly video update (embedded below). We took a different approach this time – James opened by discussing the market setting, then Kenny covered some of the positive (bullish) factors impacting markets, and I closed with some of the bearish factors to watch. I’ll cover a few of the topics discussed in this article.
For the market overview, James discussed the stronger market setting as we enter the fall this year as compared to a year ago. Prices for 500-600 lb. and 700-800 lb. steers are higher and live cattle prices are significantly higher than a year ago. Boxed beef prices have declined since the peak earlier this summer but remain strong compared to previous years.
Kenny had the fun section of the presentation as he talked about the reasons for optimism in the cattle markets. He focused on supplies and the improved feedlot situation in both the short-run and long-run. Exports have been strong in 2021, especially the continued growth in exports to China. Kenny also talked about drought and beef cow numbers and the expectation for lower cow numbers. The tightening supply situation combined with strong domestic and international demand are key reasons for optimism in cattle prices.
I closed out the discussion with some factors that are headwinds to cattle markets and a few points on risk management. For headwinds, corn prices are still the biggest factor and corn futures prices have been volatile. An example of that volatility, December corn prices jumped 15 cents per bushel on the day we recorded this video. Corn prices have declined slightly but remain elevated when compared to previous years. I also briefly discussed the recent surge in the delta covid variant and the uncertainty that brings to the market.
Overall, there are optimistic factors in the current market and this is the reason we have seen higher market prices. It is also the reason that feeder cattle futures prices have increased around $20 per cwt since May. In the last few minutes of the video, I touch on price risk management tools given the stronger price expectations and how producers can take advantage of these expectations if there is a tool that fits their operation.