The recent increase in slaughter cow prices has been the big story in the cattle markets over the past few weeks.
Andrew Griffith, Extension ag economist with the University of Tennessee, says prices in his local markets have jumped $10 per hundredweight or more since early January.
“Cow-calf producers have been concerned about low slaughter cow prices since the middle of October, when prices in Tennessee dipped into the mid $40s and proceeded to the low $40 level for November and December,” he writes in his weekly market outlook.
“The $10 per hundredweight price increase the past month is essentially $120 to $140 more per head. The seasonal tendency would say there is still room for slaughter cow prices to increase, which means they could reach $60 per hundredweight, resulting in $60 to $70 more per head than the current week’s value.”
Griffith says producers should not be too choosy when it comes to a market price.
“Producers should not concern themselves with hitting the top of the market, but rather take advantage of what is expected to be a favorable marketing window for slaughter cows the next three to four months,” he says.
Along with culled cows, lightweight calf prices have also rebounded nicely.
“With the expectation of bountiful forage in the spring due to favorable moisture levels, stocker producers are providing support to the calf market and this is expected to continue through late March and early April,” Griffith says.
“Though calf prices have been strong, the feeder cattle market is severely undervalued compared to other classes of cattle. The reasoning for seemingly undervalued feeder cattle may be due to muddy pens and unfavorable feeding conditions, but it is also likely linked to cattle feeders lack of confidence that the finished cattle market will remain strong through the second and third quarters of 2019.”
The five-area weighted average price last week came in at $124.74/cwt. on a live basis, up 72 cents from the previous week.
“Finished cattle trade has been following a similar pattern the past several weeks,” Griffith says. “That pattern is to delay trade until as late as possible in the week and then price cattle in the narrow trading range that has been consistent the past several weeks.
“Current finished cattle prices are neither favoring the direction of packers or feedlots which means both parties can be content or they are both dissatisfied because they want a larger share of the margin.”