– Josh Maples, Assistant Professor & Extension Economist, Department of Agricultural Economics, Mississippi State University
As a followup to last week’s newsletter, this week’s article will dig deeper into the cash market reactions. Auction market prices dropped last week amid the decline seen in futures markets over the past two weeks. Prices were lower across all southeastern states shown in the tables below for both 500-600lb steers and 700-800lb steers. Prices dropped the most in Oklahoma City and in Missouri.
Prices were roughly $20 to $50 per CWT lower for 500-600 lb. steers. Averaging across all states, the value of a 550 lb. steer was about $150 lower per head in the Southeast compared to the week prior. The impacts were certainly larger in some states.
The charts above and below show the prices of 500-600 lb. steers and 700-800 lb. steers in Mississippi, Arkansas, and Kentucky since the beginning of 2024. These are weekly statewide average prices. The drop last week is evident in the last data point. However, prices are still at very strong levels. In 2024, the 500-600 lb. market showed a more typical seasonal pattern with lower prices during August through October. Prior to the recent drop, auction prices had been flatter since August but had not significantly declined seasonally.
Cattle futures markets remained volatile last week. The CME December Live Cattle contract traded below $224 for part of the day on October 27th but closed today (November 3rd) at $232.18. This is sharply lower than the $248 price on October 16th and is close to the average trading price of the December contract during the month of September ($235.80). Similarly, the CME November Feeder Cattle contract traded below $330 for part of the day on October 28th but closed today (November 3rd) at $342.73. This contract topped $380 on October 16th but averaged $353.72 during trading in September. The market uncertainty over the past few weeks has not crashed the futures market to very low levels, but it did erase the rally seen in futures markets over the past month or two.
As was discussed last week, there remains significant fundamental strength for cattle markets given the tight supplies of cattle and strong demand for beef. However, uncertainty can push both futures and auction prices lower as the market absorbs new information or the lack of new information. It will be interesting to watch the markets in the coming weeks to see if the uncertainty and volatility lessens.
