– Dr. Kenny Burdine, Livestock Marketing Specialist, University of Kentucky
Fed cattle markets have continued to slowly and steadily increase from the first week of July. It’s not been a major increase, as the 5-area weighted average price is only up about $3-5 per cwt from that time. But, the more that early July price looks like a seasonal low, the more confident I will be about things moving forward. From my Kentucky feeder cattle perspective, I’m most encouraged by the deferred CME© live cattle futures contracts, which are trading at quite a premium over August. The February contract, which is likely the relevant contract for heavy feeders moving through markets now, is trading $11 higher than August.
Federally inspected cattle slaughter continues to be very close to 2019 levels, running about 1% below over the last three weeks. Slaughter weights have been running around 4% above year-ago and are continuing to drive increases in beef production. But, the only cure for this problem is to keep harvesting cattle and get caught up. Boxed beef prices are now running about 5% below last year, but the cow beef cutout is still running above 2019. This is just another sign that we remain in a ground beef-oriented market.
CME© feeder cattle futures have been relatively stable since mid-July, trading the low-mid $140’s across all contracts. That price level on the board points to pretty solid returns for summer stocker operators who have been grazing calves since spring. Heavy feeders have continued to improve throughout July and are up almost $15 per cwt from the first week of the month. Even calf prices, which had been steadily declining since May have put up a small rally the second half of the month (see figure 1.)
Figure 1: Feeder Steer Prices since the First Week
of January , Kentucky Average $ 9 ( per cwt)
Source: USDA AMS, Livestock Marketing Information Center, and Author Calculations
I mentioned earlier that cow beef cutout values continue to suggest that we are in a ground beef-oriented market. But cull cow prices had fallen off slightly in mid-July with average dressing 80-85% boning cows dipping below $60 per cwt for two straight weeks. For clarity, that was still a strong July cull cow market historically, but off from what we had been seeing. However, cull cow prices stormed back this week to put in their highest weekly price of the year, even surpassing their late March high (see figure 2). While I am showing the average dressing boning cows below, there were a lot of cows that sold in the $70’s and even the $80’s, and some very strong bull prices at auctions this week.
Figure 2: 80-85% Boning Cow Prices since the First
Week of January Kentucky Average ($ per cwt)
Source: USDA AMS, Livestock Marketing Information Center, and Author Calculations
Rains are always spotty in the summer, but I don’t ever recall differences like this across the state. I am writing this on July 31st, the morning after our first significant rain here in several weeks. It was nothing short of a blessing, but I have heard from a lot of individuals that have had way too much rain at times over the last month. I’m just hoping the combination of a pretty widespread late July rain and some cooler temperature ahead will translate into some much-needed pasture growth during the month of August.