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

FED CATTLE: Fed cattle traded $1 higher compared to last week on a live basis. Prices on a live basis were primarily $95 to $96 while dressed prices mainly $157 to $158.

The 5-area weighted average prices thru Thursday were $95.97 live, up $1.06 com-pared to last week and $157.67 dressed, up $3.84 from a week ago. A year ago, prices were $114.64 live and $183.06 dressed.

Feeding cattle is like being in ankle deep manure, but standing on one’s head would be worse. Finished cattle prices continue to hang around their lows, but the futures market is producing a little optimism. The optimism may not be much, but any is a good thing for cattle feeders. The August live cattle contract is attempting to get back to $100 while the October and December contracts are trading well above that mark. The reason this is optimistic is because there is nothing in the cattle feeders favor right now. Coronavirus hit the market hard. Now the seasonal tendencies of finished cattle prices are weighing on the market. On top of what is going on in the cattle market, corn futures prices have increased even though Continue reading →

– Dr. Kenny Burdine, Livestock Marketing Specialist, University of Kentucky

The general negative trend in cattle markets has continued over the last four weeks. For the last full week of June, federally inspected cattle slaughter was estimated above year-ago levels for the first time since early April. This simply has to continue if we want to work through the backlog of cattle in the system that resulted from several weeks of greatly reduced harvest. However, I do want to put this increase in perspective. For the last week of June, slaughter was estimated to be 1.4% above 2019 levels. This compares to slaughter being down 35% from 2019 levels at its lowest point this spring and down more than 20% for five straight weeks from mid-April to mid-May. Simply put, increases in slaughter are encouraging, but it is going to take a lot of time to get caught up.

I am writing this on July 3rd, and it appears that fed cattle are going to trade around $95 per cwt for the week. Current fed cattle prices shouldn’t fundamentally impact current feeder cattle prices, but I do think the sharp drop over the last several weeks is putting a damper on prices across the board. Winter CME© live cattle futures should be driving current feeder cattle prices and they have dropped way less than cash prices, which does give me some reason for optimism as we move towards fall.

Stockyard receipts were light this week, probably due to the holiday week. But Kentucky cattle prices were down across the board. Calf prices were down again, but not by a great deal. Over the last four weeks, the state average price of a 550 lb M/L #1-2 steers is Continue reading →

– Stephen R. Koontz, Department of Agricultural and Resource Economics, Colorado State University

The COVID impacts on cattle and beef markets are not all behind us but the majority of the disruptions appear to have passed. The exceptions are, and that will remain for some time, the cattle on feed inventories, the number of long-fed cattle, and fed animal slaughter weights. Details on the cattle on feedstocks and flows for last month will have to wait until two weeks. Beef cut prices have returned to normal levels with tenderloins being rather weak. Fed steer and heifer slaughter volumes have returned to strong levels and the Saturday kill is very comparable to last year’s high values. Packer margins remain rather strong, but are well off of record highs, and are being realized as plants are back to operating at or close to full capacity.

Of course, the fed cattle complex remains in a bind. Fed cattle prices are below $100 per cwt. Fed animal slaughter weights were roughly 50 pounds above last year’s seasonal low. But last year’s weights will increase through November and the current year is holding steady just below last year’s peak. The supply scenario is usually difficult this time of year with gradual declines in numbers but higher animal weights. And that difficult scenario is usually on the tail of market opportunities in the spring. The disruptions this year eliminated the Continue reading →

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

Questions continue to be asked about holding on to cattle of all weight classes and delaying marketing of those animals. If calves are lightweight or soon to be weaned then this may still be a good alternative compared to marketing cattle in a soft market.

If the cattle are heavier and ready for the feedlot then keeping them longer may not be an alternative at all. The only alternatives are to market them or to own them in the feedlot.

The issue with any decision is that there always comes a time when the cattle have to be marketed and there is no guarantee prices will improve between now and when the cattle must be moved. The risk-reward relationship appears to be off center at this point with more risk and not enough reward in the calf and feeder cattle market.

The one market producers need to be taking advantage of is the slaughter cow market. Slaughter cows continue to receive strong prices, but these prices will soon start to slip as more and more producers begin sending them to town.

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

July 1 marked the beginning of a new commodity year for Livestock Risk Protection (LRP), a price insurance product that functions similar to buying put options. As such, LRP is designed for the seller of cattle facing downside price risk. An LRP policy has endorsements for fed cattle and feeder cattle, the latter with adjustment factors (built in basis levels) for certain weights and classes. Two major changes were implemented for LRP, the premium subsidy was again increased and the premium payment date was moved from the time of purchase until the end of the coverage.

The LRP subsidy was substantially increased a year ago, with limited impacts in terms of volume of cattle covered. For Fed Cattle, there was an increase in the number of head covered in the 2020 commodity year to 8,098 head across 62 paid policies. However, that low aggregate volume implies that the premium has not been a driving factor in the use of LRP by feedlots. For Feeder Cattle, there was a decrease in the number of head covered from the prior year, down to 79,846 head across 393 paid policies. Sales volume continues to be steady for feeder cattle, especially from South Dakota down to Texas. The higher volatility in 2020 has resulted in Continue reading →

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

FED CATTLE: Fed cattle traded $4 to $5 lower compared to last week on a live basis. Prices on a live basis primarily ranged from $93 to $97 while dressed prices ranged from $152 to $156.

The 5-area weighted average prices thru Thursday were $96.24 live, down $4.58 compared to last week and $154.78 dressed, down $5.96 from a week ago. A year ago, prices were $110.58 live and $179.36 dressed.

Finished cattle prices have converged to live cattle futures with the cash market making the long trek to meet the futures price. The failure of the futures market to bend in the slightest is not a good sign for summer cattle marketing. The June con-tract is rolling off which makes the August contract the next destination and it is trading ever so slightly higher than the June contract. The answer to this market turning around is most likely to show up in finished cattle weights. Once finished cattle weights begin to decline, the price for finished cattle will find support. The reason a decline in finished weight will be the turn-around will be because it will Continue reading →

– Josh Maples, Assistant Professor & Extension Economist, Department of Agricultural Economics, Mississippi State University

No segment of the cattle industry has been spared from the uncertainty and turmoil driven by COVID-19. However, the dynamics for the slaughter cow market have been a little different than those for the live cattle coming from feedlots that have garnered the most discussion due to plant disruptions.

Slaughter cow prices have been one of the few bright spots for cattle producers over the past few months. Slaughter cow prices in the Southern Plains averaged $57.84 over the past 6 weeks of available data which is 19.5 percent above the same period in 2019. Generally, cull cow markets are most directly related with ground beef demand.

Cull cow slaughter comes from both beef and dairy cows. In 2019, the split for total federally inspected cow slaughter was about 50/50 between beef and dairy cows. But the seasonal patterns of beef and dairy cow slaughter are a little different. Dairy cow slaughter typically Continue reading →