Trading continues to dwell in the same narrow price range for fed cattle.
The 5-area weighted average prices through May 20 were $119.71 per hundredweight live, up a penny from the previous week, and $190.56 dressed, up 8 cents from a week ago.
“Given the time of year, it is probably a positive sign for cattle feeders in that prices have not started to seasonally decline,” says Andrew Griffith, Extension ag economist with the University of Tennessee. “The futures market is pricing in a fairly strong summer price relative to spring prices with little to no seasonal price decline. The futures market offers no promises, but it does offer opportunities.”
Those opportunities may be challenged by higher feed costs.
“It may be appropriate to evaluate what the market is offering or not offering in terms of profitability for summer marketing,” Griffith says in his weekly market outlook. “It seems the major unknown for spring and summer placements is what it is going to cost to feed cattle. The corn market continues to bounce around like an opossum on a Pogo stick, which will make decision making tough.”
Beef cutouts continued to climb, with Choice cutouts priced at $352.92, up $1.74 from a week ago. The Select cutout was $303.16, up $1.55 from Thursday and up $10.22 from last week.
The Choice-Select spread was $22.76 compared to $23.76 a week ago.
“It may be an overstatement to say the boxed beef price run this year is more amazing than last year, given the magnitude prices reached a year ago,” Griffith says. “However, prices realized a year ago were in the midst of slaughter facility closures and reduced beef production.
“Weekly beef production in 2021 has been well above the five-year average production and in line with expected weekly production the last six months of 2020. Thus, the strong wholesale beef price is being supported by demand.
“The current price run appears to have a solid backing from a demand perspective, and it is a much steadier price increase,” Griffith says.
“How much more the price will increase is unknown, but the price decline is expected to be slow and steady. The summer grilling holidays are providing much of the current support and they will continue to do so, which is why prices are expected to slowly decline compared to last year’s rapid decline.”