– Dr. Andrew Griffith, Assistant Professor, Livestock Marketing Specialist, Department of Agricultural and Resource Economics, University of Tennessee
The Choice cutout was up $8.69 from a week ago.
FED CATTLE
Fed cattle traded steady to $1 higher on a live basis compared to last week. Prices were mainly $186 to $188 on a live basis. Dressed trade was mainly $294 to $296.
The 5-area weighted average prices thru Thursday were $187.08 live, up $0.05 compared to last week and $295.90 dressed, down $3.77 from a week ago. A year ago, prices were $184.14 live and $291.67 dressed.
Finished cattle are trading with a $1 to $2 negative basis in most cattle feeding regions with October live cattle futures trading a little over $189 per hundredweight. What is more interesting about the futures market is the October through April contracts are all trading within a $1.25 per hundredweight range while the contracts from June 2025 through February 2026 are trading in a $2.58 per hundredweight range at the time of this writing. Additionally, next year’s price expectation is lower than this year’s price expectation based on live cattle futures. These simple observations scream confusion in the market. Some are sure to disagree there is confusion, but tighter supplies should not result in a $5 to $7 price decline.
BEEF CUTOUT
At midday Friday, the Choice cutout was $311.05 up $1.10 from Thursday and up $8.69 from a week ago. The Select cutout was $287.14 up $0.98 from Thursday and up $4.57 from last week. The Choice Select spread was $19.34 compared to $15.22 a week ago.
Beef and veal exports for August totaled 238.2 million pounds, which was 19.4 million pounds less than July and 22.1 million pounds less than August 2023. The month to month decline and the year over year decline was due to no significant change from any of the trading partners. All trading partners reduced the quantity of beef purchased from the United States. This is likely due to sources of less expensive beef being available relative to the high beef prices in the United States. Despite a decline in the quantity of beef exported in August, there is little concern from a market standpoint as international demand for U.S. beef remains strong. In fact, total beef exports the first eight months of 2024 are only 74.6 million pounds lower than the same period in 2023. Did exports rebound in September and how will they finish out the year? The data will bring the answer into focus, but the expectation is that exports will remain strong given beef prices. At the same time, the results of the upcoming presidential election could influence the market moving into 2025.
OUTLOOK
Based on weekly auction market averages, steer prices were $3 to $7 higher compared to last week while heifer prices were $2 to $7 higher compared to the previous week. Slaughter cow prices were $1 to $4 higher compared to the previous week’s weighted average price while bull prices were $1 higher compared to the prior week. The calf market is moving in a contraseasonal direction as calf prices are increasing. October tends to be the month in which calf prices reach their seasonal low as many producers are bringing their spring born calf crop to market. The softness in the market tends to still be evident in November before slowly firming in December. Contrary to this seasonal tendency is the fall of 2024. The price of calves may have already achieved its seasonal low as two consecutive weeks of higher prices to start October may be the price reversal. If the price lows for the fall marketing time period have already been experienced then cattle producers have much more to look forward to as prices will be expected to increase through the spring. The primary thought or reasoning behind market prices increasing in the current environment is that buyers are seeing fewer offerings than they may have been expecting. It is well documented that fewer cows were in the herd, which means fewer calves available for stocker, backgrounding, and feedlot operations. This known information has been masked to some degree as feeder cattle have continued making their way to the feedlot due to heifers not being retained and strong beef production from growing cattle larger in the feedlot. The simple calculation of the whole equation still remains in that fewer cows equals fewer calves unless cows start twinning like ewes or they start reproducing like rabbits. Neither of these seems possible and even less advantageous to cattle producers. There is likely to be considerable uncertainty in the futures market in the coming months. It is likely the market will undervalue feeder cattle the next few months as participants sort through fact and fiction.