Cow-calf producers continue to wait for the seasonal jump in prices to begin.
Andrew Griffith, Extension ag economist with the University of Tennessee, says that likely accounts for the reduction in feedlot placements recently. He says producers are reluctant to market calves at prices they believe are too low.
“Many producers have become accustomed to holding calves through December and marketing them in January,” Griffith writes in his weekly market outlook.
“This has become a common practice for some due to tax reasons and more so for others to capitalize on a price increase that has occurred nine out of the last 10 years (2008-17 data) from December to January.”
He says since Nov. 1, 500- to 600-pound steers have averaged in the $138 to $144 per hundredweight range.
“The expectation would be for calf values to begin increasing slowly over the next couple of months and peak once spring grass is ready to graze,” Griffith says. “However, calf grazing operations may be hesitant to bid up grass cattle prices with the soft feeder cattle prices that are a drag on the market.
“One thing is certain — current calf values are unlikely to invoke any major changes by a cow-calf producer from the standpoint of expanding or contracting the cattle herd.”
Fed cattle prices were lower last week, with the five-area weighted average price coming in at $123.04/cwt. live, down nearly $2 and nearly even to 2018 prices.
“Cattle feeders were able to hold the line this week as prices were mainly steady,” Griffith says. “The wet and cold pen conditions have cattle feeders on edge because it is negatively impacting feed efficiency and average daily gain. However, the same conditions could be one factor contributing to strong finished cattle prices, as slaughter weights are sure to be declining due to the unfavorable conditions.”
Griffith says weather forecasts suggest winter conditions will not be easing anytime soon.
“This may continue to provide support for cattle prices in the near term, but industry participants should not be surprised if prices falter before the spring market provides support,” he says.
Choice beef cutout prices were up more than $4 from the previous week, with Select beef prices up $2.70. Griffith says the Choice/Select spread was $5.11/cwt., compared to $3.28 a year ago.