TN livestock market highlights

December 3, 2021 report

Posted

FED CATTLE: Fed cattle traded $2 to $3 higher compared to last week on a live basis. Prices on a live basis primarily ranged from $140 to $142 while dressed prices were mainly $218 to $220.

The 5-area weighted average prices thru Thursday were $140.46 live, up $2.33 compared to last week and $219.96 dressed, up $4.03 from a week ago. A year ago, prices were $109.77 live and $172.29 dressed.

Fed cattle prices have increased nearly $18 per hundredweight since the first week of October. Compare that to October 2020 when it took until the first week of April for the market price to increase $18 and reach the spring price peak.

Cattle feeders should be satisfied with the way prices have been moving the past two months, but upside potential looks to be minimal moving from today through the spring. In other words, the market may hold its own the next several weeks or months, but pushing much higher will be a challenge. There should be price support moving into the spring as demand will seasonally increase exiting the winter. However, the market has probably already experienced it largest gains from fall to spring.

BEEF CUTOUT: At midday Friday, the Choice cutout was $273.94 up $1.92 from Thursday and down $6.21 from a week ago. The Select cutout was $259.61 up $1.36 from Thursday and down $2.90 from last week. The Choice Select spread was $14.33 compared to $17.64 a week ago.

Boxed beef prices have been headed in the opposite direction of the cattle com-plex. Since the last week of August, the composite Choice boxed beef price has declined about $76 per hundredweight, which represents a 22 percent price decline over a three-month period. Similarly, the composite Select boxed beef price has declined $59 per hundredweight representing a 19 percent price decline over the same three months. Despite the rather large price decline in boxed beef prices and the increase in finished cattle prices, packer profitability remains strong. There is no reason at this time to expect beef demand to soften, which should continue supporting wholesale beef prices and the cattle complex. There may still be a little more holiday buying that needs to take place, but most holiday purchases will have been completed at this point. The expectations moving forward will be for a strong restocking of the beef counter following consumer holiday purchasing and some of the focus shifting from middle meats to end cuts as winter establishes a hold on the market.

OUTLOOK: Based on Tennessee weekly auction price averages two weeks ago, steer prices were $4 to $8 higher compared to that week while heifer prices were $3 to $8 higher compared to two weeks ago. Slaughter cow prices compared to two weeks ago were steady to $5 higher while bull prices were mainly steady. The strong price improvement in the futures market the week of Thanksgiving carried over into the auction markets this week as calf and feeder cattle prices zipped higher. These higher prices corresponded with strong cattle movement this week as many of the local auctions ran an extremely large number of animals through the ring. Sellers of cattle are certainly satisfied with this week’s prices as demand remains strong while buyers are trying to make quick work of purchasing cattle as there is an expectation that prices will continue strengthening. There is no doubt a fire has been lit under the cattle markets as calf prices are following feeder cattle prices and feeder cattle prices are following finished cattle prices. There is also no doubt futures market traders are counting on a bull market as each contract month has a higher price than the preceding contract month. At the time of this writing, the April feeder cattle contract was trading $5 per hundredweight higher than the January contract, and the August feeder cattle contract was nearly $9 higher than the April contract. Prices for the November con- tract have exceeded $181, which is a smooth $20 higher than the current CME feeder cattle index value. Thus, the market is calling for 800 pound steers to exceed $1,400 per head within the next year. This type of market move seems far-fetched to some, but we have seen larger prices increases in a shorter quantity of time in the past seven or eight years. If prices move to this level, there will certainly be increased heifer retention, which is likely to drive feeder cattle price and fed cattle price higher.

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