Livestock Comments: Dr. Andrew Griffith

FED CATTLE: Fed cattle trade was not established at time of publishing. Asking prices in the South were $214 to $215 with bids at $210 to $213. Asking prices in the North were $340 and higher. The 5-area weighted average prices through Thursday were $211.05 live, down $0.55 compared to a week ago and no dressed trade to report. A year ago, prices were $184.00 live and $294.45 dressed. Some would call it procrastination. Others would call it doing business. Still others may call it playing the game. No matter what it is, cattle feeders and packers continue to be challenged with coming to terms on finished cattle prices. There is no doubt every seller wants to receive a higher price and every buyer wants to pay a lower price, but each player in this cat and mouse game has obligations to fill and a need to do business. That is why cattle have always traded. It would seem the leverage moves towards the cattle feeder with late week trades given the current market conditions. Packers have to have cattle for the next week while feeding cattle another week or two for cattle feeders is not as big of a deal.

BEEF CUTOUT: At midday Friday, the Choice cutout was $335.16, up $1.46 from Thursday and up $0.29 from a week ago. The Select cutout was $319.39, up $3.04 from Thursday and up $2.18 from a week ago. The Choice/Select spread was $15.77 compared to $17.66 a week ago. The general public tends to use the term demand incorrectly as it relates to an economics term. There is a difference in demand and quantity demanded, and most people are actually talking about quantity demanded when they speak of demand. As the price of a good increases, the quantity demanded decreases for a normal good. However, demand itself is a function of both quantity and price. In the case of beef, demand the past five years has been extremely strong when compared to the previous 20 years. Based on Bureau of Labor Statistics and USDA-ERS data and LMIC analysis, the retail all-fresh beef demand index for 2024 was 128, which is the highest level over the past 25 years. In fact, beef demand the past five years has been higher than any single year the first 20 years of this century. From 2000-2019, the beef demand index averaged 103, while it has averaged 123 the past five years. If recent history is any indicator, then there is little concern over softening beef demand. Beef demand could decline marginally and the beef industry would still be in good shape.

OUTLOOK: Based on Tennessee weekly auction reports, steer prices this week were $2 to $4 higher compared to last week while heifer prices were $2 to $5 higher than the previous week. Slaughter cow prices were $2 to $4 higher compared to a week ago while slaughter bull prices were steady to $2 to $5 higher compared to last week. When it comes to cattle prices, the sky is the limit. No one knows how high cattle prices will go, and no one knows when cattle prices will begin to decline. Thus, the sky may not be the limit in this cycle as 500-pound steers in Tennessee are not bringing $10 per pound yet. In fact, they are not even hitting $5 per pound. However, there have been some animals that exceeded $4 per pound in the 500-pound weight class. It would be naïve to say cattle prices cannot reach a certain price level, because if a person lives long enough and the world does not end, then any price level is possible. This statement holds for higher prices and lower prices. For instance, cattle prices will never be under $1 per pound for a 500-pound steer in Tennessee. Given the current set of information, this would be an accurate statement. However, if some new information were to be discovered a year from now or 100 years from now that a foodborne illness was passed through beef or that cattle were a host for a parasite that killed humans quickly, then the dynamic changes. The hope is that no such things ever happen, but who would have thought pig prices would have declined to nearly nothing in the 1990s? The point is that cattle prices are good now and producers should take advantage of strong cattle prices. Cattle prices will seem relatively low at some point and producers should also take advantage of weaker cattle prices. An opportunity always exists, but people do not always know and understand how to capture that opportunity. Cattle prices are expected to remain elevated despite the fact that spring grass cattle buying is winding down. Feedlots are in a situation of having to assume some of these risky cattle to fill pens.