Boxed beef cutout values have leveled off, although they remain strong, University of Tennessee ag economist Andrew Griffith says.
“The week-over-week price change may be an indication that boxed beef prices have stalled,” he says in his weekly market outlook. “However, current prices are strong, which means stalling may not be such a bad thing. The alternative could be for boxed beef prices to decline, which means it would start raining on the parade.”
The key question now for analysts is what beef prices will do this spring and throughout 2021, with a variety of factors to consider.
“Most purveyors of the beef market likely expect beef prices to soften in February and possibly into March as these two months tend to experience soft demand,” Griffith says. “Such a decline would lead into another escalation of prices as grilling season hits. It is difficult to know how consumers will respond with many restaurants remaining closed or at reduced capacity.”
The full reopening of restaurants and sporting events, along with how willing customers are to return to these places, could shape beef prices as well.
“If restaurants move toward full capacity at any point, one could expect consumers to be hesitant at first but also eager to dine in such restaurants,” Griffith says. “Another unknown will be summer sports such as baseball, where a considerable quantity of beef is consumed.”
Overall, Griffith says the situation seems to indicate strong beef prices this year.
“Given the information for how the market responded in 2020, beef prices are likely to remain strong in 2021,” he says. “As demand goes, so will prices.”
Griffith says there is optimism in the cattle business right now.
“As the cattle market rolled into February, optimism abounds for the cattle industry,” he says. “Lightweight calf prices are beginning to catch fire even before there are any signs of spring greening. This bodes well for the calf market moving through February and March.”
The calf price trends likely mean support for feeder cattle prices.
“The higher calf prices would indicate that stocker producers believe feeder cattle prices will be much stronger moving through the summer months, which is exactly what futures traders are banking on right now,” Griffith says. “With two months of grass cattle buying ahead of the market, there is ample time for 500-pound steer values to push higher than the $800 per head mark. Heifers of similar weight will likely push toward $700 per head at the same time.”