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

Can good, bred females be profitable at these prices.

There have been several heifer and cow-calf pair sales over the past several weeks. Given the price levels, some observers have asked if those females will have a profitable life or if the purchaser will lose money on those females.

First, the West Kentucky Select Bred Heifer Sale sold 193 bred heifers with an average purchase price of $3,264 per head. A couple of weeks prior to that heifer sale, I attended a bred cow and cow-calf pair sale. The biggest portion of those animals sold for more than $3,000, and I would make no claim that they were anything special. Given the information of where female prices have been recently, can the buyer make money with these animals?

The answer is always “it depends.” If calf prices remain elevated for three or four years and those females produce a calf each year then they will likely be profitable. Another way to be profitable may be to market the animals first calf and sell a bred female or cow-calf pair next year. If they fail to rebreed or lose a calf then profitability will be difficult.

– William Secor, Ph.D. University of Georgia Department of Agricultural & Applied Economics

Beef demand has been great this year. In 2024, the U.S. is estimated to consume the most beef per person since 2009. This comes amid the highest prices on record, with the all-fresh retail beef price averaging above $8 per pound for the last five months (Figure 1 below). This represents historically strong demand that has not been seen in years.

Figure 1.

Figure 2 plots beef consumption per person against the inflation-adjusted all-fresh retail price by year. Each year is represented by the last two numbers of each year (e.g., 1999 is the number “99” in the right-hand corner). The red circle area represents where . . .

Continue reading Beefenomics: Cattle Market Update – Beef Demand Resilient Through 2024

– Stephen R. Koontz, Ph.D., Professor, Department of Agricultural & Resource Economics, Colorado State University

Cattle and beef markets are wrapping up the fourth quarter on a very strong note – especially for smaller animals. Calf prices for 5-6 weight animals in the southern plains have advanced better than $50/cwt in the last four weeks. And prices for 4-5 weight animals have moved further. The fall run is apparently over.

Live fed cattle prices remain strong with cash trades better than $190 but prices for the year look range-bound to me between $180 and just better than $190. The boxed beef cutout value is holding better than $300 with a mix of performance at the primal level. Rib prices have been seasonally outstanding, and tenderloins have also been strong. Loins are showing some seasonal weakness as is ground beef. End meats are showing solid price levels but not much in terms of improvements. Once the market retreats from the strong rib purchases, and the Choice-Select spread seasonally softens, much will be determined by Continue reading Strong Calf Prices Finish the Year →

– Dr. Kenny Burdine, Extension Professor, Livestock Marketing, University of Kentucky

The decrease in feed prices over the last two years has had a significant impact on the beef sector. Cheaper feed has incentivized cattle feeders to push fed cattle to higher slaughter weights. The combination of higher weights and increased imports of live cattle has resulted in a slight increase in beef production for 2024, despite the fact that federally inspected slaughter has been down by about 3.5%. This can be seen in the table below and stands in sharp contrast to the decrease in beef production seen in 2023 and what USDA-ERS is projecting for 2025. The table also shows year-over-year production changes for pork and broilers for the same time period.

While increased harvest weights are impacting beef production at the present time, long term production growth will come from increasing the size of the US cowherd. Analysts are closely watching female slaughter, heifers on feed, and other factors for signs of heifer retention, but those signs are not yet present. Once heifer retention is underway and the cowherd actually starts to grow, one can start to Continue reading While Looking for Signs of Heifer Retention, Don’t Ignore Production Levels of Competing Meats →

– Matthew Diersen, Ph.D., Risk & Business Management Specialist, Ness School of Management & Economics, South Dakota State University

LRP premiums adjust with volatility in the market.

Recently a producer asked if Livestock Risk Protection (LRP) premiums adjusted with volatility in the market like options do. The quick response was yes; as futures prices and options premiums change, so do LRP premiums. Like options, LRP has several moving parts. However, expected (or implied) volatility is the only aspect that is not known. A comparison of LRP and options when volatility is both low and high would provide some empirical evidence that both respond to volatility in a similar way. The implied volatility can be backed out of premiums. The CME Group provides LEVL, which is an index of volatility levels for nearby live cattle contract. Recently the volatility in that market has been about 12 percent or a relatively low level for live cattle. Back in late August the volatility was higher, above 16 percent.

How do the premiums compare under different volatility levels? An at-the-money put option on the April Live Cattle contract settled last Friday at Continue reading Insurance Observations →