Livestock Comments: Dr. Andrew Griffith

FED CATTLE: Fed cattle traded $4 to $6 higher compared to last week. Prices in the South were mainly $228 to $230 while dressed prices were mainly $379 to $380. The 5-area weighted average prices thru Thursday were $235.14 live, up $5.92 compared to a week ago and $379.16 dressed, up $10.13 from last week. A year ago, prices were $194.11 live and $312.86 dressed.

The finished cattle market spun on its heels and moved higher this week following a couple of weeks of softer prices. This was certainly an unexpected turn of events as prices seasonally soften this time of year. However, live cattle futures shot higher this week and wholesale beef prices are remaining stronger than some may have expected, which may be providing support for finished cattle prices. It is unlikely any of the cattle that would have crossed the U.S. and Mexico border the last quarter of 2024 would be coming off feed at this time, but it could still be factoring into packers’ willingness to pay for cattle as fewer cattle will be available for slaughter as annual imports of Mexican calves and feeder cattle account for about two full weeks of harvest in a year.

BEEF CUTOUT: At midday Friday, the Choice cutout was $383.55 down $1.11 from Thursday and down $7.22 from a week ago. The Select cutout was $372.38 up $1.52 from Thursday and down $6.61 from a week ago. The Choice Select spread was $11.17 compared to $11.78 a week ago.

Wholesale boxed beef prices continued to decline this week just as they did the previous week. This price decline is expected in that only one more summer grilling holiday remains. This does not mean consumers will avoid grilling beef the next seven weeks, but there will not be any long weekends in which the masses will place their focus on a special event. What consumers will continue to eat is ground beef, which provides a good segue to what has been happening in the 90 percent fresh lean and 50 percent fresh lean beef markets. The price of 90 percent lean grinding beef was $4.09 per pound last week, which represents a $0.37 per pound increase from the same week one year ago and nearly $0.80 per pound higher than the start of the year. The price of 50 percent lean grinding beef last week was $2.59 per pound, which is $1.61 per pound higher than the same week one year ago and $1.69 per pound higher than the start of the year. Lean grinding beef is expected to maintain demand as ground beef is affordable for many consumers.

OUTLOOK: Based on Tennessee weekly auction reports, steer prices were $8 to $12 higher than two weeks ago while heifer prices were $9 to $14 higher than two weeks ago. Slaughter cow and bull prices were $4 to $7 higher than the last week of June. Many of the weekly livestock auctions in Tennessee were closed the first week of July in observance of the Independence Day holiday resulting in little to no cattle movement. This resulted in strong marketings this week as producers were willing sellers with the strong gains in the futures market. Last week’s discussion had significant focus on feeder cattle futures, but it is necessary to discuss futures contract prices again this week as prices surged throughout the week. For example, the August feeder cattle contract gained $11 to $12 per hundredweight when compared to where it closed the Thursday before Independence Day. In theory, this would indicate 800-pound steer values increased nearly $100 per head in one week. In reality, it is unlikely steer values actually increased that much in one week, but such price movement in the futures may support further gains in the cash market.

Another aspect of the domestic and global market that should be discussed is the closure of the U.S. and Mexican border to cattle imports from Mexico. Discovery of the New World Screwworm in Mexico in late November 2024 resulted in an immediate closure of the border to Mexican cattle. The border was reopened for a 15-week period spanning February and May but was closed again following a discovery of the same parasite further north in Mexico. USDA had announced a phased reopening of the border to begin in July that was wiped off the books this week when yet another detection was found less than 400 miles from the U.S. border. In recent years 800,000 to nearly 1.3 million head of calves and feeder cattle have crossed the border annually. These cattle are important to the success of producers in the region, but it appears many of these animals will not make their way into the U.S. system.