Livestock Comments: Dr. Andrew Griffith

Livestock Comments

FED CATTLE: Fed cattle traded $4 to $6 higher on a live basis compared to last week. Prices were mainly $200 to $205 on a live basis. Dressed trade was mainly $320.  The 5-area weighted average prices thru Thursday were $202.61 live, up $5.81 compared to last week and $320.08 dressed, up $7.70 from a week ago. A year ago, prices were $174.32 live and $273.63 dressed.

What is there to say about $200 finished cattle in the South, or what more needs to be said than $200 fat cattle? Thinking in simple math, a 1,500 pound steer is worth $3,000. Prices were even higher in the North on a live basis putting them on par with the dressed price. It is simply hard to fathom from a historical perspective the magnitude of cattle prices. Twelve years ago, there was tremendous resistance for the Choice boxed beef cutout price to eclipse $200 per hundredweight and now finished cattle prices are blowing the doors off the price mark. The Bible talks about pearly gates and streets paved with gold. In other words, things we find highly valuable on Earth are trod on in Heaven. Does this mean beef will be used as skip rocks on the glassy seas?

BEEF CUTOUT: At midday Friday, the Choice cutout was $333.12 up $2.34 from Thursday and up $8.18 from two weeks ago. The Select cutout was $313.57 up $5.22 from Thursday and up $17.51 from two weeks ago. The Choice Select spread was $19.55 compared to $28.88 a week ago.

Despite the rib primal price declining about $100 per hundredweight since its’ peak price in December, the Choice and Select cutout values have managed to increase. This is largely due to chuck and round primal values increasing rapidly with a little help from the short plate and flank. The chuck and round primal values have increased $30 to $35 per hundred-weight the past two weeks while the short plate is $15 to $20 higher. This does not sound like a huge increase in value compared to the $100 decline in the rib primal, but the chuck and the round make up about half of the carcass when combined while the rib would only make up 9 to 10 percent of the total carcass. Thus, a small change in the chuck and the round value can significantly change the weighted average value of the entire carcass. This same concept applies to the Select cutout, but chuck and round values do not vary much from a Choice carcass to a Select grade carcass. Thus, this is why the Choice Select spread is narrowing as consumers look to end meats to throw in the slow cooker.

OUTLOOK: No week to week trends could be established this week due to markets being closed for two consecutive weeks, but it appears steers prices are about $10 higher than the last sale in December while heifer prices are about $5 higher than the last sale before the Christmas break. Similarly, slaughter cow prices appear to have increased $3 to $5 from the last sale of 2024 while bull prices are also up $2 over that time period. Despite a lack of cash trade in the calf and feeder cattle market the past two weeks, buyers were eager to lay hands on inventory as they quickly bid prices higher. This was discussed in last week’s column as pent up demand and the general seasonal tendency should result in higher prices. There tends to be a good number of cattle come to market in early January as some producers put off selling for tax reasons. However, there will not be as many available this year for the fundamental reason of fewer cows in the breeding herd and the likelihood that some sold early to ensure receiving a strong price for their production. 

As market participants look forward to next week, one would expect cattle prices to continue demonstrating their strength. However, the winter precipitation expected across Tennessee and a large swath of the South may grind cattle movement to a halt for sales early in the week. The only auctions that may be able to do business are those who hold sales in the second half of the week. Regardless, when cattle are able to be traded, the expectation is for continued strength in the market. As one ponders how high prices can go, the next question is how high heifer and breeding female prices will go. The replacement female market has already demonstrated strength for bred females, pairs, and three in one offerings. The next place to look for strength is in the heifer calf market. Will heifer calves close some of the discount gap compared to steer mates as cattlemen look to develop and breed females? One would think somebody has to have interest in these females as they should have a strong value as bred females.